Full Coverage Auto Insurance: Unavailable, Now What?

Full coverage auto insurance is not available when the vehicle is older than 10 years, is not driven much or at all, or if the owner cannot afford the cost of the insurance. In these cases, a cost-benefit analysis is required to determine if full coverage is worth it. Full coverage auto insurance is also not available if the owner cannot afford the cost of the insurance, or if the vehicle is not financed and the owner chooses to only have liability coverage. It's important to note that there is no consensus on what full coverage means, and it can vary by state and insurance company.

When you have an older car

Age and Value of Your Car

The age of your car is an important factor in determining whether you need full coverage. If your vehicle is over ten years old, it may not be worth the cost of full coverage. Older cars generally have lower values, and the extra amount you pay in premiums may not be justifiable. Check your vehicle's current value using resources like Kelley Blue Book to make an informed decision.

Cost-Benefit Analysis

Perform a cost-benefit analysis to assess if the benefits of full coverage outweigh the costs. Compare your car's actual cash value (ACV) with your annual premium payment. If the payout you would receive in the event of a total loss is significantly lower than what you're paying in premiums, full coverage may not be the best option.

Alternative Coverage Options

If you decide to drop full coverage, you may still want to maintain some level of protection for your older car. Consider alternative coverage options such as liability insurance, which covers damages or injuries you cause to others. You can also explore optional add-ons like roadside assistance or rental car reimbursement, which are typically inexpensive and can provide additional peace of mind.

Driving Habits and Risk Factors

Evaluate your personal risk factors and driving habits. If you don't drive frequently or have a low-risk driving profile, you may not need the extensive coverage provided by full coverage insurance. Consider factors such as your driving frequency, driving history, and parking situation to determine the level of coverage that aligns with your needs.

Financial Considerations

Analyze your financial situation and budget. If the cost of full coverage insurance is straining your budget, it may be wise to consider alternative options. Assess whether you could afford repairs or replacement of your older car in the event of an accident. If you have a sufficient emergency fund or savings to cover potential expenses, dropping full coverage may be a viable choice.

Remember, the decision to maintain or drop full coverage auto insurance for your older car should be based on a comprehensive assessment of your vehicle's value, your financial situation, and your personal risk factors. It's essential to weigh the benefits of full coverage against the potential costs to make an informed decision.

When you have a new car

If you have a new car, it is highly recommended that you get full coverage auto insurance. This is because full coverage insurance protects your investment in your vehicle and prevents a large out-of-pocket expense if an accident happens.

Full coverage insurance is a combination of liability, comprehensive, and collision insurance. It covers damage to your car from a wide range of scenarios, including accidents, weather events, collisions with animals, and vandalism. It also covers injuries or damage you cause to others.

While full coverage insurance is not required by law, it is a good idea to have it if you can afford it. This is especially true if you have a new or expensive car, regularly commute in heavy traffic, live in an area with extreme weather or high car theft rates, or cannot afford to repair or replace your car if it is damaged or stolen.

To determine if you need full coverage insurance, consider the value of your car and weigh your financial situation and risk tolerance. You can use tools like Kelley Blue Book to check your car's current market value and compare it to your insurance premiums and potential out-of-pocket costs.

Additionally, remember that full coverage insurance doesn't include everything. You may need to add extra coverage, such as new-car replacement insurance, emergency roadside assistance, or custom parts and equipment coverage, depending on your specific needs.

When you have a classic car

Classic cars are often defined as vehicles that are at least 25 years old, hold or appreciate in value, and are used primarily for leisure rather than daily transportation. If you own a classic car, you may find that full coverage auto insurance is not available to you. Instead, you will need to take out a classic car insurance policy, which is a separate type of insurance designed specifically for vintage vehicles.

Classic car insurance offers several benefits compared to standard auto insurance. Firstly, it provides guaranteed value coverage, meaning that in the event of a total loss, you will receive the full insured value of your classic car without any depreciation. Secondly, classic car insurance offers flexible usage, allowing you to use your vehicle for pleasure driving, exhibitions, and tours, rather than just daily commuting. Finally, classic car insurance premiums are typically lower than those for standard auto insurance because these vehicles are driven less frequently and with greater caution.

When insuring a classic car, you will need to meet certain requirements. These may vary depending on your insurance provider and your state, but generally include the following:

• Your classic car must be stored in a safe place when not in use, preferably in an enclosed structure such as a private garage or storage unit.
• Your classic car cannot be your primary vehicle and should only be used occasionally.
• You must have a clean driving record, free of excessive speeding violations or reckless driving incidents in the last three years.
• You must have a separate insurance policy for your regular-use vehicle.

It is important to note that the definition of a "classic car" and the specific requirements for classic car insurance may vary among insurance companies and states. Be sure to check with your insurance provider and review your state's requirements to ensure that your vehicle qualifies for classic car insurance.

When you have a rare car

If you own a rare car, you may find it challenging to obtain full coverage auto insurance. Here are some important considerations and options to explore:

Understanding Full Coverage:

Full coverage auto insurance typically includes liability, comprehensive, and collision insurance. Liability insurance covers damages or injuries you cause to others, while collision insurance covers repairs to your vehicle after an accident, and comprehensive insurance covers damages resulting from events outside your control, such as natural disasters or theft. It's important to note that full coverage may not include all types of insurance and might require adding additional protections separately.

Assessing the Value of Your Rare Car:

The value of your rare car is a crucial factor in determining the availability and cost of full coverage insurance. If your vehicle is highly valued and considered a classic or collector car, specialty insurance providers that cater to rare or vintage vehicles may be an option. These specialty insurers often have specific requirements, such as limited mileage and secure garaging, but they can offer benefits like guaranteed value coverage and flexible usage.

Comparing Insurance Providers:

When full coverage insurance is not readily available for your rare car through standard insurance companies, it's worth exploring specialty insurers. Companies like Hagerty, Grundy, and others offer policies specifically designed for collector vehicles, providing coverage options that recognize the unique value and usage patterns of rare cars. These insurers often have expertise in valuing and protecting classic cars and can offer competitive rates.

Considering Usage and Storage:

The usage and storage of your rare car can impact the availability and cost of full coverage insurance. Some specialty insurers may require that your rare car is used for pleasure driving only and that it is stored in a secure, enclosed garage when not in use. Understanding the expectations of different insurance providers can help you find a policy that aligns with how you use and store your vehicle.

Obtaining Appraisals and Agreed Value:

Specialty insurers often work with you to determine the agreed value of your rare car. They may request photos and details about your vehicle to consult with their experts and establish a fair valuation. This agreed value then serves as the basis for your insurance coverage, ensuring that you receive the full insured amount in the event of a total loss.

By exploring these options and working with specialty insurers, you may be able to secure full coverage for your rare car, protecting its unique value and providing peace of mind.

When you have a car loan

If you have a car loan, you will likely be required to have full-coverage auto insurance until your loan is paid off. This is because full-coverage insurance protects your lender from a total loss in the event of an accident or damage. In this case, full coverage typically includes liability insurance, comprehensive insurance, and collision insurance.

Liability insurance is mandatory in nearly every state and covers damages or injuries you cause to another vehicle or person. Comprehensive and collision insurance are optional but are often required by lenders to ensure the vehicle can be repaired or replaced. Comprehensive insurance covers damage caused by events outside your control, such as vandalism, theft, or weather-related damage. Collision insurance covers damage to your vehicle from an accident, regardless of who is at fault.

Some lenders may also require additional coverages, such as uninsured motorist coverage or gap insurance. Uninsured motorist coverage protects you in the event of an accident with a driver who doesn't have insurance or doesn't have enough coverage. Gap insurance helps pay off your car loan in the event of a total loss, and some lenders may require this coverage for the duration of your auto loan.

While full-coverage insurance may be more expensive than a liability-only policy, it provides extra financial protection in case of an accident or damage to your vehicle. If you don't have full coverage and your car is damaged or stolen, you will still be responsible for paying off your loan.

It's important to note that the specific requirements and types of coverage included in full-coverage insurance may vary by state and lender, so be sure to review your loan contract and state insurance requirements carefully.

Frequently asked questions