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When Do I Need Full Coverage Auto Insurance?

Full coverage car insurance refers to an insurance policy that includes coverage for injuries and damage you cause in an accident, plus coverage for damage to your vehicle. It is not a specific auto insurance policy but rather a combination of coverage types you can include in your auto policy. Full coverage car insurance may mean different things to insurance companies, with various coverage included. However, full coverage generally includes bodily injury liability, property damage liability, comprehensive and collision coverage.

When Do I Need Full Coverage Auto Insurance?

In most U.S. states, you must carry at least minimum liability insurance coverage, and these minimum limits vary by state. There may also be other required coverage, such as personal injury protection (PIP) and uninsured motorist coverage. In these states, you may be able to sign a waiver form if you do not want these other coverages.

No state requires you to carry full coverage auto insurance. However, if you lease or finance your vehicle, the lender often requires comprehensive and collision to be added to your policy as part of the loan agreement. The lender is also considered an owner until you pay the vehicle off, so the financial institution wants to insure its investment.

If you own your vehicle outright, full coverage may still be worth the additional premium cost. Full coverage provides added financial protection if your vehicle is damaged or totaled in an accident. Rather than having to pay to repair or replace the car entirely out of pocket, the auto insurer will pay the cost minus your deductible.

State Requirements

Every state that requires insurance coverage has its own minimum limit requirement. Without meeting at least the minimum limit requirements in your state, you could be subject to fines and license suspensions. Even the states that do not require auto insurance have minimum limits that must be met if drivers choose to get coverage.

The average cost of car insurance varies by state, and different state minimum requirements can affect these rates. Some states that require the highest limits of minimum liability coverage are:

  • Alaska: 50/100/25
  • Maine: 50/100/25
  • Michigan: 50/100/10
  • North Carolina: 30/60/25
  • Texas: 30/60/25

Not all states have high requirements for liability insurance coverage. These states have the lowest requirements:

  • California: 15/30/5
  • Florida: 10/20/10
  • Louisiana: 15/30/25
  • New Jersey: 15/30/5
  • Pennsylvania: 15/30/5

Financing Requirements 

Financing requirements differ by the lender depending on their requirements and the type of loan or lease you have with them. For example, leased vehicles generally require higher liability limits than the state’s minimum requirements, usually 100/300/50. You will also likely have limitations on the deductible amount you choose for comprehensive and collision coverage. The deductible amount—what you pay in the event of a claim —can usually be no higher than $500 or $1,000.

Though lenders may not require gap insurance, it is coverage that may be worth considering. Gap coverage will pay the difference if your financed vehicle is totaled and its actual cash value is less than what you owe on the loan. Without gap coverage, you have to pay that difference until the loan has been satisfied, even if the vehicle is totaled.

Full Coverage Cost with Major Car Insurance Companies

The cost of full coverage auto insurance varies from state to state and company to company. Below are the average annual rates from well-known providers based on data Bankrate analyzed from Quadrant Information Services:

Insurance companyAnnual full coverage car insurance average cost
Allstate$1,921
Erie$1,233
Geico$1,405
Nationwide$1,485
Progressive$1,509
State Farm$1,457
The Hartford$2,270
USAA$1,225

Sample rates provided are based on these full coverage insurance limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

Can I Still Save Money with Full Coverage Car Insurance? 

Even though full coverage car insurance is more expensive than liability-only insurance, it is still possible to save money. There are several ways you can save on full coverage car insurance, including:

  • Ask about discounts: Just like rates, the discounts offered can differ by insurance company. You may be able to save on your full coverage car insurance by taking advantage of discounts you qualify for, like bundling home and auto insurance or having a clean driving record.
  • Comparing premiums when car shopping: Once you purchase a car, you may be surprised by how much full coverage car insurance costs. Consider finding a few makes and models you like and get quotes for each. You can compare the cost based on the same coverage to get an idea of which car is the best deal for your budget.
  • Increasing your deductible: The higher you go with the deductible, the less you pay for car insurance. If you choose this method to save on full coverage auto insurance, make sure you can afford the higher deductible if you have to file a claim.
  • Shopping for car insurance quotes: Since rates vary by company, you could save money by switching your car insurance company. The best way to know if you can save by switching carriers is to get quotes from several with similar coverage limits and deductibles. 

Is Full Coverage or Liability-Only Coverage Better? 

Whether full coverage or liability-only car insurance coverage is better comes down to personal preference and your financial situation. If you finance your vehicle, you may not have a choice in choosing full coverage car insurance. But if you own your vehicle, you can customize your car insurance as you see fit.

If you can pay out of pocket to repair or replace your vehicle if it is damaged or totaled, you may be able to save off car insurance premiums by not choosing comprehensive and collision coverage. However, if you do not want to fix or replace your car outright, it may be worth it to pay for full coverage auto insurance. Having an inexperienced driver or another high-risk person behind the wheel of your car may also mean full coverage car insurance makes sense for your situation since there is likely an increased risk of a claim.

You can customize your car insurance any time, even if you are not up for renewal. You can decide to change or remove coverage, even lower or raise your deductible, at any point during your policy period as long as you are not involved in a claim situation. Just remember, if you have liability-only and cause an accident, there is no physical damage coverage for your vehicle.

1 thought on “When Do I Need Full Coverage Auto Insurance?”

  1. I like what you said that full coverage car insurance refers to an insurance policy that includes coverage for injuries and damage you cause in an accident, plus coverage for damage to your vehicle. I drive more every day. We need a new, more comprehensive, and more protected policy. And this article will significantly help me find the right car insurance company.

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