Full Coverage Auto Insurance - Do I Need It?
How much car insurance do I need?
Every day we hear people use the term full coverage when referring to auto insurance. But, is there really such a thing when buying a car insurance policy?
Can I really buy an auto insurance policy with full coverage?
Maybe, maybe not…let’s review and see.
There’s not a day that goes by when we are quoting someone and we ask the question, what are your vehicles current coverage’s?
We typically get one of two answer:
1. Liability only
You might wonder why we are asking this question? Or, why do you need that information, and why are you asking so many questions, “I just want a quote.”
The quick answer is, because:
- We are trying to match your current coverage’s
- So, we can give you an apple to apple comparison
- So, we can make suggestions to better protect you financially
- All the above
As you might have guessed, it’s not that we are nosey, we are doing our job and giving you a comparative quote and learning about potential exposures if you are missing or have low insurance limits.
People probably assume we are just trying to upsell them additional coverage’s but the truth is they could hold us liable if we don’t do our job and review and make suggested coverage changes or improvements.
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What does it mean to have FULL coverage auto insurance?
In these examples, we are going to use the state of Missouri, but keep in mind coverage and options can be more or less available depending on your state and carrier.
Always review your coverages with your insurance professional to “insure” you have the coverage’s you want and need, before you need it.
In addition to liability coverage, other coverages that make up the term “full coverage” car insurance would include, but not limited to some of the following:
- Comprehensive coverage – Also known as other than collision. Some quick examples would be hail, flood, theft, fire, vandalism, flying object, etc.
- Collision coverage – auto accident. Damage caused to your vehicle accidentally including at-fault accident with another vehicle, hitting an object in the road or stationary object – like a building or tree.
- Rental car coverage – limits vary on a per day basis up to 30 days. Available if your vehicle is involved in an accident only. Yes, people have tried to use rental car coverage for pleasure like a vacation or trip
- Medical payments or death and dismemberment coverage (injury payment for passengers)
- Un-insured motorist liability – generally required coverage in most states. Provides liability coverage for passenger of insured vehicle if the other party is un-insured and there is bodily injury to one or more passengers.
- Under-insurance motorist bodily injury – like un-insured but generally not required in all states by law and optional in many. Bodily injury occurs to the passenger of the insured vehicle and the other party has bodily injury liability coverage, but has low or state minimum limits. In many states, California as an example, have extremely low liability limits: $15,000 / $30,000. As an example: If your passengers sustain injuries that require hospitalization exceeding $15,000 per person but with a total cap of $30,000 for all passengers, Under-insured motorist coverage would kick-in up to the limits you decide on with your insurance agent or broker.
- Roadside assistance – towing and labor. Coverage’s can range from towing to the nearest repair shop to providing room and board while your vehicle is being repaired out of town on a trip. Most carriers have a couple options ranging from reimbursement to calling their roadside assistance 24/7 hotline.
- Audio / Visual coverage – upgraded stereo or audio equipment. Today it’s not uncommon to see TV’s or high powered audio equipment installed in cars and multi-passenger vehicles. Your stand collision or comprehensive policy will only pay for factory installed equipment.
- Customized equipment – think vehicles equipped with handicap equipment. Vehicles equipped with specialized equipment to accommodate drivers with special needs.
- Accident forgiveness – no up-charge for accident. It’s becoming more common to see advertisements for accident forgiveness coverage, so your rates don’t go up at the next renewal. Optional coverage available by most carrier after a period of time, as a continuous customer of the same insurance company.
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- Electronic Key replacement – key fobs. Today these key fobs can hundreds of dollars to replace since they generally have to be cut by the dealership.
- Dog & Cat coverage – is Fido covered for injury. Yes, you can even add coverage for your pet.
- Airbag deployment – airbag goes off. Airbags have been known to go off without being in an accident and the typical airbag runs $1,000 or more
- New car replacement – assuming you have a newer vehicle. A new vehicle will replace your current vehicle if totaled. Normally, vehicle is replaced at ACV, actual cash value or wholesale value based on year, make, model and current mileage.
- Loan/lease coverage – Gap insurance. In many cases folks will put down a minimum about of money on a new car purchase or lease and if the vehicle is totaled in an accident you might find yourself upside down with loan…owing more than it’s worth. Gap insurance fills in the difference between the vehicles current wholesale value and the remaining loan amount.
- Original Parts Replacement / OEM – Parts. In some cases, your only option, depending on age, make, model the secondary market may be your only option for replacement parts. But, if you’re driving a typical high production newer vehicle you might prefer having the same OEM, original equipment manufactured parts put back on your vehicle vs. after market or used parts.
As you can see there are a lot of optional coverage’s available. So, when someone says they want or have “FULL-COVERAGE” auto insurance your insurance professional probably needs to ask a few additional questions.
Words you never will hear your insurance agent or broker say: You Have Full Coverage
You might notice your insurance agent or broker cautious to say the words full coverage insurance since it can mean something different to each person; not to mention the variety of coverage available. The list of optional coverage from simple roadside assistance to replacing your vehicle with a brand new one is endless.
The worst thing an insurance professional ever wants to hear when they tell a client, after an accident, it does not cover them is…”I thought I was covered, you said I had full coverage.”
Full Coverage Insurance Options
Most insurance companies today are now offering package
Bare Bones Plan
- Little or no extras
- No frills
- State Minimums
Middle of the road coverage
- Up Graded Coverage
- Higher Limits
- Basic Roadside
Premium or Ultra
Top of the line coverages
- Diminishing Deductibles
- Dog & Cat
- Loan & Lease
- Air Bag Coverage
- World-wide Rental car
Basically, insurance companies are giving you the McDonald’s menu selection process, depending on your wallet size. This also helps consumers pick the package that meets their needs and generally you are getting a little more for your money vs. an a la carte method.
Is Comprehensive Full Coverage?
Another question we get from time to time is comprehensive full coverage? No, comprehensive or comp is only covering your vehicle for acts of God, theft, vandalism, flood, cracked windshield, and pretty much anything else but a collision, except with hitting an animal.
What is the Cheapest Full Coverage Auto Insurance?
The cheapest full coverage car insurance would probably be the one you feel you could live without costing you more money in the long run.
Can you image the day you have an auto accident and realize you didn’t add rental car coverage? Oh yeah, I remember now talking about that coverage over with my broker and turned it down.
At the time, it seemed like a good idea to not spend an extra $20/year for the rental car reimbursement for $30/day or up to $900 for the entire month. When every penny counts, that $.54 cents a day might make a difference in your life, but what if you don’t have transportation after an accident.
So, cutting corners might not be the cheapest way in the long run, especially if you find yourself with no transportation after an accident and deductible.
How much does it cost for full coverage car insurance?
Great question, but it depends on what’s important to you and your budget. As mentioned above, full coverage to some people can mean simply having comp and collision insurance besides the required liability coverage. To others, it’s all the bells and whistles.
Adding comp and collision for some people might be as inexpensive as $65.00 a year for both per vehicle. Working with an insurance broker gives an individual more comparison options between different companies.
Adding comprehensive and collision coverage will also depend on the deductible you’re willing to take. The larger the deductible, the lower the premium. Why… because you are taking more financial responsibility.
Example: $5,000 accident with $500 deductible means the insurance companies are now going to cover up to $4,500 and you have the remaining balance to pay the repair shop of $500. Vs. if you have a $1,000 deductible and the insurance company writes a check for $4,000 for the same accident. Because you are taking on more of the responsibility for the repair cost, you’ll pay less for the cost (or premium) for the insurance.
Who has the Cheapest Full Coverage Auto Insurance?
Another good question – it just depends on which company is offering the most competitively priced insurance when you are shopping. Your choices are simple to call company after company or call an insurance broker like Insurance Brokers Group. Insurance Brokers Group will shop the insurance market for you, finding the most affordable full coverage insurance for your vehicles, home, and life insurance.
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