Do I really need full coverage car insurance?

Congratulations on your new car! Owning a car is exciting, but it also comes with responsibilities—like making sure it’s properly insured. If you’re asking yourself:

- Do I really need full coverage car insurance?
- What exactly is full coverage insurance?
- How does liability insurance compare to full coverage?

This guide will help you understand your options so you can make the best decision.

Understanding Car Insurance Coverage

While car insurance is a legal requirement, you’ve got some choices. If you didn’t finance your car, you don’t have to get full coverage. You can opt for cheaper, liability-only insurance, or add extra protection like collision or personal injury coverage. Both options provide protection, but they work in different ways, so it’s important to choose carefully.

Liability-Only Car Insurance

Liability-only insurance is the minimum coverage required in most states. It’s usually the cheapest option, but that’s because it only covers damages to other people’s cars and medical bills if you’re at fault in an accident. If you get into a wreck, liability insurance won’t pay for repairs to your car or cover your own medical expenses. You’ll have to handle those costs yourself.

Collision Coverage

Collision coverage can be added to your policy for a relatively low cost, usually around $300 a year. This coverage pays for repairs to your car if you’re in a crash, whether it’s with another vehicle, a tree, or something else. If your car is totaled in an accident, collision coverage will pay out the value of your car. It’s a good way to protect your ride without breaking the bank.

Comprehensive Coverage

Comprehensive coverage protects your car from non-collision damage, like vandalism, falling trees, or weather-related incidents. It’s affordable, often costing less than $150 a year, and can be a smart add-on to liability coverage to protect your car from unexpected events that don’t involve a crash.

Uninsured and Underinsured Motorist Coverage

This coverage helps if you’re in an accident caused by someone who doesn’t have insurance or doesn’t have enough insurance to cover the damage. Imagine someone runs a stop sign, hits your car, and then you find out they don’t have insurance. Without this coverage, you might have to pay for your own repairs. But with uninsured and underinsured motorist coverage, your insurance steps in to help cover those costs.

Medical Payments Coverage

Medical payments coverage, or personal injury protection (PIP), covers medical bills for you and your passengers if you’re hurt in a car accident. This coverage can cost less than $500 a year, which is a lot cheaper than the average hospital stay. It can also cover funeral expenses if the accident leads to a death.

Full Coverage Car Insurance

Full coverage car insurance combines everything we’ve talked about—liability, collision, comprehensive, medical payments, and uninsured motorist coverage. This type of insurance gives you the most protection, covering almost any situation that could cost you money. Although it’s not an official insurance term, "full coverage" generally means you’re covered in most scenarios, including accidents, natural disasters, and vandalism.

Here’s what you get with full coverage:

-Liability coverage: Protects you if you cause damage to others.
-Medical payments coverage: Helps pay your medical bills after an accident.
-Collision coverage: Covers repairs to your car after a crash.
-Comprehensive coverage: Covers damage from non-crash events like theft or weather.
-Uninsured/underinsured motorist coverage**: Protects you if the other driver isn’t properly insured.

When You Need Full Coverage

Full coverage is the most complete option, but it’s also the most expensive. Here’s when it’s worth it:

-If you have a car loan: Most lenders require full coverage as part of the deal.
-If you can’t afford to replace your car: If your car gets totaled, full coverage will pay you the value of your car, which can save you from a big financial hit.
-If you have limited savings: Accidents can be expensive. If you don’t have a lot of money set aside, full coverage can protect you from big out-of-pocket costs for medical bills and repairs.

What Isn’t Covered by Full Coverage?

Despite the name, full coverage doesn’t cover everything. It has limits, like only paying up to your car’s value. So, if your car is worth $14,000 but you owe $16,000 on it, you’ll have to cover the extra $2,000 yourself unless you have gap insurance. Other things full coverage usually doesn’t cover include:

- Routine maintenance or neglect
- Drivers not listed on your policy
- Driving outside the U.S.
- Business use of your vehicle
- Stolen personal items (these are usually covered by home or renter’s insurance)
- Police seizures
- Custom vehicle modifications

How Much Does Full Coverage Cost?

Full coverage insurance is the most expensive option, with the average cost being around $1,800 per year. But the price you pay can vary depending on factors like your age, driving habits, and where you live. Some people pay less than $1,000 a year for full coverage, especially if they have multiple vehicles on their policy.

Pros and Cons of Full Coverage

Benefits of Full Coverage
-Peace of mind: You won’t have to worry about unexpected costs after an accident.
-Protection from surprise expenses: Full coverage helps prevent financial surprises from car accidents.
-Access to loans: If you need an auto loan, full coverage is usually required, and it can help you get a loan in a pinch if your car is paid off.
-Covers most situations: From hit-and-runs to natural disasters, full coverage helps keep you protected.

Downsides of Full Coverage
-Cost: Full coverage is the most expensive option.
-Coverage caps: Even with full coverage, there are limits, and in serious accidents, your policy might not cover everything.

The Bottom Line

Choosing the right car insurance comes down to your situation. If your car isn’t worth much and you can afford to replace it, liability insurance with some extra protection like personal injury coverage might be enough. But if you can’t afford the risk of big out-of-pocket costs after an accident, full coverage might be the better choice.

At Insure Me Now Agency LLC, we’re here to help you find the best car insurance for your needs and budget. Get a free quote today!