Full coverage auto insurance is a term that describes having all the major parts of auto insurance, including bodily injury, property damage, uninsured motorist, pip, collision, and comprehensive. generally, you are legally required to have about half of those coverages. having the complete package is called “full coverage,” and some people opt for it for greater financial protection. In this article, we take a deep dive into what constitutes full coverage and why you should consider getting it, even if you don’t have to.
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table of contents
first part of total coverage: civil liability insurance
Liability insurance covers damage that you are at fault for and causes to another driver or to your car. it is the only part of auto insurance that you are required by law to have. Within liability, the two main types of insurance are Bodily Injury (BI) and Property Damage (PD) liability insurance. bodily injury deals with injuries you cause to drivers themselves, while property damage is any damage you cause to another vehicle or structure. no coverage is intended to protect you or your car; they are exclusively for other drivers to file a claim against their insurer.
Having these two coverages is the most basic type of auto insurance you can have. each state institutes a statewide minimum, which is written in a three-number format such as 25/50/25. The first two numbers refer to your bi coverage, where the first is the limit of insurance you have for one person in one accident, while the second is the limit for the entire accident. the third number is the limit of your property damage liability coverage.
State minimums typically range from $10,000 to $50,000 of coverage for each state. In general, liability isn’t the cheapest, but it’s certainly not the most expensive component of car insurance. to double your bodily injury limits, it will likely cost less than an additional $100 per year. PD insurance is slightly more expensive than BI, but it costs less to increase coverage.
bi and pd insurance for uninsured and underinsured motorists
bi and pd uninsured, works exactly like bi and pd coverage, except it’s only used in the event you are in an accident with an uninsured driver, who was found to be “at fault.” In most cases, you would normally only file a claim through the other driver’s insurance. since they don’t own any, you’ll need to file your own uninsured motorist coverage instead. underinsured motorist bi and pd are used in case the other driver has insurance, but not enough to cover your expenses. First, you would seek reimbursement up to the other driver’s limits, then through your underinsured motorist to offset the rest of the damage costs.
second part of total coverage: first benefits
Within the benefits of the first part there are several types of insurance that constitute the second part of the “total coverage”. For most states, self-benefit coverage is optional. It’s also generally more expensive, but its biggest advantage is that you can use it for your own damages and medical bills much faster.
personal injury protection
You can think of personal injury protection insurance as bi for your own injuries. If you were injured in a car accident, instead of having to apply through the other driver’s bi insurance, you can apply through your own PIP to pay for your medical expenses. The main benefit of pip is that it pays regardless of who was at fault. pip tends to often overlap with your own health insurance and usually works as a useful add-on and provides additional protection.
in 12 states, you are required to wear personal injury protection (pip), while in the other 38, it is optional. States where PIP is mandatory generally make those states more expensive for auto insurance. In Florida, you could expect to pay an additional $25 to $90 per year per pip, although it should be noted that Florida’s insurance requirements include one of the lowest pip limits among states where pip is required. the cost will most likely be higher depending on the limits offered by your state. In Michigan, for example, when state law required drivers to carry unlimited PIP, costs can exceed $4,000 per year.
medpay is essentially the same as pip insurance, except it’s not required in any state. medpay is mostly redundant coverage in “no-fault” states, but can be very important in states with low pip limits, or where pip is expensive.
collision insurance and comprehensive insurance
You can think of collision insurance as a pip for your car. Regardless of who is at fault, you can file a claim through your collision insurance to repair any damage to your car caused by an accident. you don’t need to wait for another driver’s insurance company to pay, which means your car can be fixed quickly.
The downside of collision insurance is that it’s usually the most expensive part of car insurance, sometimes making up more than half of the total bill. for high-value cars, the price will be even higher. Fortunately, you can control the price of your collision premium by opting for a high deductible. deductibles generally range from $50 to $2,000. the higher you choose, the cheaper your premium will be. Collision insurance is not legally required, but if you rent your car, the leasing company may require you to have this coverage.
Comprehensive coverage is similar to collision coverage, except it only covers damage to your vehicle caused by external causes. Colloquially known as “acts of god,” such events include a branch falling on your car, someone smashing your car, or an errant baseball going through your windshield. these events are, for the most part, unavoidable. Comprehensive coverage costs much less than collision, most likely because the average comprehensive claim is much smaller than collision claims. the price can also be controlled with a higher or lower deductible.
the total cost of full coverage auto insurance
full coverage insurance is significantly more expensive than basic coverage, primarily due to the inclusion of collision and pip/medpay insurance. We got a quote for a 30-year-old male driver from New York, to show how the price breaks down for each individual component. For this quote, full coverage (not including PIP, as it’s required in New York) costs 86% more and adds an additional $251 for six months, or $502 per year.
We looked at five major cities to see how costs differed between basic and comprehensive coverage. in all cities, the cost of getting full coverage was more than double the cost of the basic state minimum coverage.
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in the case of massachusetts, comprehensive coverage was nearly triple the cost of basic coverage. Is it really worth paying much more for coverage that you are not required by law to have?
why you should get full coverage
In the event of an accident, opting for liability only insurance and forgoing the “first party” benefits of full coverage means a lengthy and uncertain claims process where you have to deal with another insurer instead of with yours. Filing through someone else’s insurer means there’s a higher chance the claim won’t be approved, or you’ll have to settle for less than you wanted. Filing through another insurer also means the need to prove who the “at-fault” driver is, which in many cases can be difficult to determine and sometimes depends on the state you are in. Still, if it’s expensive to get full coverage, is it worth paying all that money for something that’s unlikely to happen? the short answer is yes.
From 2004 to 2013, the average collision claim was $3,144, while the average comprehensive claim was $1,621. what that means is that if you were to have an average accident, the damage could be worth around $3,100. if you were also the at-fault driver, you will have to pay for those damages yourself. If your car is also your primary means of travel, then it can affect how you get to work, which can cost you even more in lost wages. the average car accident also cost more than $60,000 in medical bills in 2014.
There is an inherent risk in hoping someone else’s insurance can cover that full amount. Not to mention, it can be weeks or months before you actually see payment for your medical bills if you go through another driver’s insurer. At least with pip, you know for sure you’re covered up to a certain amount, and you can see the payment as soon as you file.
how to make full coverage more affordable
Comprehensive coverage is expensive, but there are several things you can do to lower your costs. The first is to increase the deductible for comprehensive and collision coverage, which can lead to significant savings.
The next thing you can do is apply for any discounts you qualify for. insurance companies offer discounts for things like being a safe driver, a good student, or taking a driver’s education course. taking advantage of them can save you 20% on your annual bill.
The last and possibly best tip for making full coverage more affordable is to shop around. Quote comparison shopping can save you thousands each year on your auto insurance bill. we have always found a company in a certain area that offers a price well below other competitors; you just need to be diligent enough to find them too.
valuepenguin’s analysis used insurance rate data from quadrant information services. These rates were obtained publicly from insurer filings and should be used for comparison purposes only; your own quotes may be different.