Full Coverage Auto Insurance: What's Really Covered?

Full coverage auto insurance is a misleading term because no single policy delivers 100% coverage. Instead, it typically refers to a combination of comprehensive, collision, and liability insurance, which covers you in most scenarios. While liability insurance is mandatory in almost all states, comprehensive and collision insurance are optional. The average cost of full coverage car insurance is $1,895 a year nationwide, but rates vary depending on the insurance company, location, and other factors.

Liability insurance

All liability auto insurance policies have limits on how much the insurer will pay out on a claim. These limits are divided into three categories: bodily injury per person, bodily injury per accident, and property damage per accident. For example, a 25/50/25 liability policy includes $25,000 in bodily injury coverage per person, $50,000 in bodily injury coverage per accident, and $25,000 in property damage coverage per accident. Some insurers also offer combined single limit (CSL) policies, which provide a single liability limit, such as $300,000, instead of separate limits for each category.

It is important to note that liability insurance does not cover damage to the policyholder's own vehicle or injuries sustained by the policyholder or their passengers in an accident. To protect their own vehicle, policyholders can purchase comprehensive and collision coverage, which are optional in most states. Comprehensive coverage pays for repairs or replacement of the vehicle due to events outside the driver's control, such as natural disasters, theft, or vandalism. Collision coverage pays for repairs or replacement of the vehicle after an accident, regardless of fault.

Comprehensive insurance

The cost of comprehensive insurance may vary depending on your vehicle's value and the deductible you choose. The deductible is the amount you must pay out of pocket before the insurance company covers the remaining damages. Some policies may have no deductible, while others may have a $100 or $250 deductible or more.

Collision insurance

If you own your vehicle outright and choose not to carry collision coverage, you will be responsible for the cost of repairs or replacement if you are at fault in an accident or involved in a single-vehicle accident. If the other driver is at fault, their liability coverage will typically cover the damage.

The value of your vehicle and your ability to pay for repairs or a replacement out of pocket are important factors in deciding whether to purchase collision coverage. If your vehicle is new or expensive, collision insurance can provide financial protection in the event of an accident. However, if your vehicle is older and has a low market value, the cost of collision coverage may outweigh the potential benefits.

In summary, collision insurance can provide valuable financial protection in the event of a collision, but it is not required by law and may not be necessary for all drivers, especially those with older vehicles of low market value.

Uninsured motorist coverage

Underinsured motorist coverage, on the other hand, comes into play when you are hit by a driver who does not have adequate insurance to cover the damages or injuries they caused. This coverage ensures that you and your passengers receive the necessary compensation for medical bills and vehicle repairs. Both types of coverage are often offered together and are mandatory in many states, although specific requirements vary.

In the unfortunate event of a hit-and-run accident, uninsured motorist coverage can be a valuable safeguard. You can file a claim against your uninsured motorist coverage to seek compensation for damages or injuries sustained. However, it is important to note that some states may not cover property damage resulting from hit-and-run incidents under this coverage, and collision coverage may be necessary to cover such damages.

When determining how much uninsured motorist coverage to include in your policy, it is generally recommended to match the amount of your liability coverage. For bodily injury coverage, you can choose limits that align with your liability coverage limits. For property damage coverage, you can select a limit that reflects the value of your vehicle, especially if you do not carry collision coverage.

Uninsured and underinsured motorist coverage are crucial components of full-coverage auto insurance, providing financial protection in the event of accidents involving uninsured or underinsured drivers. By understanding the specifics of this coverage and the varying requirements across states, you can make informed decisions about your auto insurance policy and ensure adequate protection for yourself and your passengers.

Personal injury protection

The purpose of PIP is to ensure that individuals injured in auto accidents can restore their health and productivity as quickly as possible. It is particularly relevant in no-fault states, where an injured policyholder's medical expenses are covered by their own insurance, regardless of who caused the accident. PIP is also useful in situations where the other driver does not have insurance.

The specific benefits of PIP vary by state. For example, in New York, basic PIP coverage includes reasonable and necessary accident-related medical and rehabilitation expenses, 80% of lost earnings from work up to a maximum of $2,000 per month for up to three years, and up to $25 per day for a year to cover other reasonable and necessary expenses. Additionally, a $2,000 death benefit is payable to the estate of a person eligible for PIP benefits who dies in a motor vehicle accident.

While PIP provides comprehensive coverage for personal injuries, it does not cover expenses unrelated to such injuries, such as damage to your vehicle, theft of your vehicle, or damage to someone else's property. To protect against these types of expenses, you would need to add comprehensive car insurance coverage, auto collision coverage, and property damage liability coverage, respectively.

Frequently asked questions