What Is Full Coverage Car Insurance? What It Covers Explained

What is full coverage insurance
Semel Risk Consultants

Full coverage car insurance is typically referred to by agents, lenders, and insurers as having both liability and physical damage coverages. However, there is no agreement on what “full coverage auto insurance” entails. Don’t be fooled: no insurer can sell a policy that covers you 100% of the time. In this post, we’ll look at what full coverage car insurance means and see the cheapest companies that offer full coverage policies.

What Is Full Coverage Auto Insurance?

Full coverage car insurance has no single definition, but it typically includes liability protection as well as comprehensive and collision coverage.

If you are at fault, liability coverage protects you from the costs of property damage or injury to others.

Insurance for comprehensive and collision coverages covers repairs to your vehicle if it is damaged on or off the road due to an at-fault accident or collision with another vehicle or object, animal damage, a fire or weather-related incident, vandalism, or theft.

Other coverages that, depending on your policy, may be included in full coverage auto insurance include:

  • Personal Injury Insurance (PIP)
  • Medical Services Payments
  • Uninsured/Underinsured Driver
  • Guaranteed Asset Protection Insurance (GAP)
  • Rental Car coverage
  • Road Assistance

These extra coverages are optional and can be included in a quote for cost comparison purposes.

What Doesn’t Full Coverage Include?

PIP, GAP, uninsured/underinsured coverage, and other optional coverages listed above are typically not included in full coverage insurance unless you opt for them. Furthermore, commercial use of your vehicle is usually not covered. This includes drivers for ridesharing companies such as Uber, Lyft, and DoorDash. Some supplemental coverages may or may not include vehicle customization or accessories, and some may not cover pet injuries unless a separate pet injury rider is purchased.

When selecting a policy, it is critical to inquire about the specifics of your coverage and whether you require supplemental policies to ensure your protection.

How to Decide Whether Full Coverage Car Insurance Is Right for You

Full coverage car insurance is not a common legal requirement for car owners, but it can contribute to your peace of mind and ensure that you are protected when you need it the most. If you drive a financed or leased vehicle, your lender will almost certainly require you to purchase full coverage to protect your investment.

The most important benefit of full coverage car insurance is financial protection for you and your vehicle as an asset. When deciding whether full coverage car insurance is a good investment to protect your vehicle, you should consider the actual cash value of your vehicle, your deductible, and how prepared you are to pay for repairs or medical bills.

  • Actual cash value (ACV): The most recent and evaluated replacement cost value of your vehicle. You can find out your vehicle’s ACV by looking up the year, make, model, and trim level online. The value is then reduced by any vehicle wear and tear, as well as any claims and unrepaired damage.

Use this simple formula to calculate how many years of full coverage you’d need to pay to replace your car: (A-B/C)

  • A: The monetary value of your vehicle.
  • B: The deductible amount.
  • C: The annual cost of full-coverage car insurance
Read Also: ACTUAL INSURANCE CASH VALUE: What It Is and All You Need to Know

For Instance:

  • If your car was worth $4,000, your deductible was $500, and your annual full coverage car insurance cost was $941, it would take 3.7 years of full coverage to replace it.
  • If your car was worth $15,000, your deductible was $500, and your annual full coverage car insurance cost was $941, it would take 15.4 years of full coverage to replace it.

Using the preceding example as an example, consider the following:

  • If you have an older car worth $4,000 that you intend to replace in the next few years, your best option may be to save and set money aside for the next 3.7 years to replace your vehicle rather than investing in full coverage car insurance.
  • If you drive a newer or more expensive car, however, full coverage car insurance is a great way to protect your financial investment. If your $15,000 car was totaled, your policy would cover its replacement, which would otherwise take you 15.4 years of policy savings to buy a new car.

Full coverage car insurance loses value as an investment as your vehicle ages, accumulates miles, and loses value. According to experts, a full coverage policy may be a worthwhile investment if your annual full coverage payment is less than 10% of the value of your car.

If your policy payment exceeds 10% of the actual cash value of your car, you should think about not getting full coverage car insurance or canceling it.

How to Find the Lowest-Cost Full-Coverage Policy

Shopping around with several car insurance companies is one of the best ways to get cheap full-coverage auto insurance. It is not difficult to obtain multiple personalized quotes to compare coverages. Even high-risk drivers can save up to 47% on auto insurance by comparing rates and coverages.

When looking for full coverage car insurance quotes, have the necessary information on hand. Here are some steps to take when shopping for car insurance to get accurate auto quotes:

#1. Collect your information

You’ll typically need to enter your name, date of birth, address, and driver’s license information for all household drivers, including yourself, to get an accurate quote. For each vehicle to be insured, you’ll also need to know the year, make, model, and VIN. Knowing your current coverage can assist you in locating the best deal for full coverage.

#2. Provide the same coverages.

Whether you’re comparing two or five different auto insurance companies, keep the coverages you’re comparing consistent. To find the best cheap full coverage car insurance, use the same liability limits and comprehensive and collision deductibles.

#3. Take into account optional coverages.

Add-ons may result in higher premiums, but they may be worthwhile for you. Some of the options include accident forgiveness, gap insurance, and rental car coverage. Optional coverages differ from company to company and may not be available to all customers.

Businessyield has compared rates across the board to help you find the best and cheapest full-coverage car insurance in your state. The types of coverage provided by insurance companies differ, which is why it’s critical to compare your own costs by obtaining customized quotes. Your personal situation and needs are the best determinants of how much you’ll pay for full coverage auto insurance. These tips and steps can help you get a head start on finding the best option for you.

The Best Car Insurance Companies for Full Coverage

When deciding on a car insurance company, you should always look for the best deal. However, if you’re looking for more than just savings, you should consider customer service and coverage features as well. All of these factors are combined with lower rates by the best car insurance companies.

Car Insurance Companies With the Best Full Coverage

  1. State Farm: The most widely accessible company
  2. Erie: Ideal for drivers from the Midwest and the East Coast.
  3. USAA: The best company for military families is USAA.

#1. State Farm – The most widely available full-coverage car insurance.

State Farm is the cheapest full-coverage insurance company available to almost all drivers across the country. The company, the largest insurer in the United States, has lower rates than any other large insurer and many regional insurers.

State Farm also has a good customer service reputation, with a low rate of customer complaints and high marks for claims satisfaction from J.D. Power.

State Farm is an excellent — and widely available — option for full coverage shoppers due to its low rates and excellent customer service.

#2. Erie – The best local full-coverage car insurance.

Erie offers the best of both worlds: it offers some of the cheapest full coverage rates in the country while also providing excellent customer service. The issue is that Erie is only available in 12 states, most of which are in the Midwest and on the East Coast.

State availability of Erie:

  • Illinois
  • Indiana
  • Kentucky
  • Maryland
  • New York City
  • North Carolina (NC)
  • Ohio
  • Pennsylvania
  • Tennessee
  • Virginia
  • In Washington, D.C.
  • West Virginia (WV)
  • Wisconsin

#3. USAA – The best full coverage car insurance for military families.

USAA is widely regarded as one of the best car insurance companies in the country. It has the cheapest full coverage policies, according to our rate analysis, and our research indicates it has some of the lowest complaint rates in the country. Third-party research supports our findings, with J.D. Power’s Auto Claims Satisfaction Study naming USAA the best in terms of customer satisfaction.

Cheapest Full Coverage Car Insurance After a Ticket

We discovered that GEICO is also the cheapest widely available insurer for full coverage after a ticket, with an annual cost of $1,265 on average. Accidents and tickets on your driving record may raise the cost of full coverage car insurance in your state, reducing your chances of obtaining cheap-cost auto insurance. When compared to the average annual premium for full coverage insurance, a ticket costs $759 more per year.

#1. GEICO

When compared to other companies, GEICO’s average full coverage rate of $1,265 after a speeding ticket is the most affordable for most drivers. Policyholders with a clean driving record can expect to pay $324 less per year for comprehensive and collision coverage with GEICO than those with a ticket.

Drivers with a history of infractions can save even more money with GEICO’s discounts for seat belt use, airbags, and credit for completing a defensive driving course.

#2. USAA

USAA was the lowest-cost company for these coverages, with an average annual cost of $939. This costs $122 more per year than not having a ticket. On the other hand, USAA is only available to military members, veterans, and their families.

Rates will vary greatly depending on where you live, the type of ticket you receive, and other personal factors. Obtaining a personalized quote for these auto coverages will aid in determining which company offers the best cheap car insurance after a speeding ticket.

Cheapest Full Coverage Auto Insurance Rates After an Accident

If you’re at fault in an accident, State Farm has the cheapest rates, costing an average of $1,434 per year.

If you are involved in an accident, it may affect your ability to obtain cheap-cost full-coverage car insurance. While not all accidents and claims will cause your rates to rise, you should expect your rates to rise if you are in an accident. When we compared rates for the same 50 businesses, we discovered that the average rate increase is $1,130 per year.

#1. State Farm Insurance

State Farm offers some of the lowest full-coverage auto insurance rates for most drivers, with an average premium of $1,434 after an accident. Drivers insured by State Farm who have an accident on their record can expect to pay $320 more for full coverage insurance than if they have a clean driving record.

State Farm offers additional discounts for airbags, anti-theft devices, and the completion of a defensive driving course.

#2. USAA

USAA once again had the lowest rates for this type of driver for those who were eligible. The USAA policyholders pay an average of $1,236 per year after an at-fault accident.

Being a high-risk driver can be expensive, but you can and should still get multiple quotes to ensure you get the best car insurance rates for which you qualify.

Cheapest Full Coverage Car Insurance with Higher Coverage Limits

The majority of the rates on this page are for the 50/100/50 policy described in our methodology, but if your liability limits are increased to 100/300/100, we discovered that GEICO is the cheapest full coverage insurance option, with rates averaging out to $1,047 per year.

Increasing liability coverage limits from 50/100/50 to 100/300/100 may cost more, but it provides more protection if you cause bodily harm or property damage in an accident. These increased limits include a $50,000 increase per injured person, a $200,000 increase in total injuries per accident, and a $50,000 increase in property damage coverage.

GEICO

Customers of GEICO pay an average of $1,047 per year for 100/300/100 coverage, which is $126 more than 50/100/50 coverage. Increasing your liability coverage is often relatively inexpensive and can cover you for thousands of dollars in costs if you cause an accident.

The amount by which rates change when liability limits are changed varies by company. Even if you’re trying to save money on your insurance, you should still purchase a sufficient amount of liability insurance. Before you go shopping, try to figure out how much liability car insurance you need to protect yourself in the event of an accident.

How to Compare Full Coverage Insurance

The goal of comparison shopping is to find comparable insurance coverage at a lower cost. When comparing policies from various insurers, make certain that you:

  • Select liability limits that are consistent. When you shop for insurance, you should choose $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, and $25,000 in property damage liability per accident.
  • Select the same deductible for both comprehensive and collision insurance. Increasing your deductible lowers your policy’s cost and vice versa.
  • Set the same coverage limits for all other coverages, such as uninsured/underinsured motorist coverage, personal injury protection, and others. Additional safeguards are more expensive.

If you follow these steps, you’ll discover that different insurers offer the same coverage at different prices. The best and cheapest car insurance company for your neighbor may not be the same as the best one for you.

How Reducing Your Coverage Can Help You Save Money on Your Insurance Premiums

You can also save money on insurance by reducing your coverage. You can, for example,

  • Avoid comprehensive and collision insurance. In this case, you will no longer have full coverage. However, if you have a low-value car, the savings will be worthwhile.
  • Boost your deductible. If you raise your deductible, the amount your insurer will pay you for a claim will be reduced. You will pay a lower premium in exchange.
  • Lower liability and other coverage limits. If you lower your liability limits, you reduce the protection provided by your insurer and risk not having enough coverage to cover the total costs of an at-fault accident.

However, keep in mind that decreasing coverages carries some risk. Although it may make sense to drop unnecessary coverages on occasion, you risk having insufficient coverage after an expensive accident.

Increasing your deductible increases your out-of-pocket costs when filing a claim, putting your savings at risk after an accident. Furthermore, lowering your liability limits may expose you to unexpected costs if your insurance does not cover a major accident.

Full Coverage Insurance FAQs

Is full coverage the most expensive?

Full coverage is more expensive because it includes liability coverage as well as collision and comprehensive coverage, which protect you from car damage in the majority of accidents.

Which type of car insurance is cheapest?

The cheapest sort of car insurance and the lowest amount of coverage required by most states is minimum liability insurance. For individuals who require a higher level of protection, most car insurance rates give full coverage prices.

How much does car insurance go down after 1 year no claims?

30%
The amount of the reduction grows with each year of claim-free driving. After one year, you may receive 30%, with the percentage increasing each year until you receive 70% NCD after five years. The majority of corporations give a maximum NCD of 70%, with others offering 75% or 80%.

References

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  1. Vor kurzem habe ich ein unversichertes Auto beschädigt. Echt hilfreich war zu lesen, dass man eine Vollkaskoversicherung in jedem Fall abschließen sollte, um hohe Kosten bei einem Unfall einzusparen. Ich werde einen Unfallgutachter suchen, der den Schaden zunächst ermitteln kann.

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