What Is Full Coverage Insurance
Full coverage car insurance provides protection for your vehicle and injuries, not just the other drivers. Comprehensive and collision insurance, both included in a full coverage policy, help you pay for damages from collision and non-collision-related incidents.
Protects you from expenses if your car gets damaged from non-collision events. These may include vandalism, fire or even theft.
Protects from costs caused by damages to your car if you hit an object or if another driver crashes into you.
Just because its called full coverage car insurance doesnt mean it protects you from everything that could happen while youre on the road. Full coverage car insurance covers the other driver and their car and you and your vehicle. Although it isnt the norm in all states , some auto insurance providers consider uninsured/underinsured motorist coverage as part of full coverage car insurance.
Some drivers confuse comprehensive and full coverage insurance because of the terminology, but these are not synonymous. Comprehensive insurance is one of the coverages included in a full coverage policy, along with collision insurance. Typically, you purchase comprehensive and collision coverage together, but this isnt always the case.
While you may spend more on full coverage in the short term, there are several long-term advantages of carrying this coverage.
Is Having Liability Insurance Enough
You usually need to carry full coverage auto insurance if you have a car lease or loan. Most financial institutions require it. Once youve finished with your payments, it may be tempting to drop comprehensive and collision insurance to save money, but it still may cost you more in the long run. Most drivers find liability-only insurance with state minimum limits doesnt provide enough coverage if you cause an accident, you may pay more out-of-pocket.
That said, there are logical reasons to stop paying for comprehensive and collision insurance. The table below lists some considerations you may want to take into account.
- Choose liability if:
Estimate your car’s depreciated value.
Taking a look at your cars depreciated value is a crucial step.
If, for example, you determine your vehicle is worth $1,000, but you pay $400 a year for full coverage car insurance, youll be losing money after 2.5 years. It makes the extra amount you pay for comprehensive and collision insurance not worth it. In comparison, if your car is worth $20,000, a $400 annual premium is an excellent deal.
Determine the annual cost of your full coverage car insurance policy.
Next, youll have to figure out how much a full coverage policy costs. Make sure that you provide accurate information when you request quotes. Its always best to compare quotes from multiple providers since carriers often offer varying rates.
Find out how long it takes to pay off your cars worth in premiums.
Think About Your Financial Situation
Although generally mandatory, car insurance may seem unnecessary for those on a tight budget. However, paying a few hundred dollars a year for at least the minimum coverage can save you from greater financial strain. For instance, if you crash your car into someone elses property and are sued for the damages, those expenses can be far steeper than your insurance premium. Not having auto insurance could also open you to state penalties and the risk of license suspension.
Canceling your insurance or a lapse in coverage could also make you a high-risk customer and result in more expensive premiums later on. Therefore, instead of forgoing insurance, looking for an affordable insurer and available discounts may be worthwhile to keep your costs low.
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Definition And Examples Of Liability Insurance
After an accident that injures another person or their property, you might face liability claims or even a lawsuit. If your negligencesomething you did or didnt docaused another person harm or damages their property, you could be held legally accountable for their losses. Liability insurance can help protect you from the costs of being liable for an accident.
Homeowners liability insurance, for example, helps protect you if someone is injured on your property and decides to sue you for damages. Your liability coverage protects you from financial losses by covering the costs of the lawsuit and any legal judgments against you.
Talk To The Department Of Insurance
We are the state agency that regulates the insurance industry. We also work to protect the rights of insurance consumers.
Contact the California Department of Insurance :
- If you feel that an insurance agent, broker, or company has treated you unfairly.
- If you have questions or concerns about insurance.
- If you want to order CDI brochures.
- If you want to file a request for assistance against your agent, broker, or insurance company.
- If you are having difficulty opening a claim with your insurance company.
- To check the license of an agent, broker, or insurance company.
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What Does Property Damage Liability Insurance Cover
Property damage liability coverage generally pays for:
- Cost for the other party to rent a replacement vehicle while repairs are completed
- Damage to buildings, homes or businesses
- Damage to fences, mailboxes and other structures
- Lost business revenue
- Related legal expenses
Your property damage liability coverage pays for damage caused by you to other peoples property. It does not help with damage to your own vehicle or damage to a vehicle owned by a family member who lives in the same household as you. To help cover repairs for your vehicle, you will need collision coverage.
The above expenses are all covered up to your policy limit. Any costs that exceed your policy limit may become your responsibility, even if you have liability insurance.
Working With An Agent Or A Broker
In California, you can buy insurance from an agent, a broker, or an insurance company. You can get insurance quotes online, over the telephone, or by mail.
- All agents and brokers must be licensed by the state to sell insurance.
- When an agent or broker sells a policy, they get a commission from the insurance company.
- Brokers charge an extra fee, called a broker’s fee. Ask what the fee is before you sign anything. Brokers’ fees are not set by law, so you can discuss the fee and ask for a lower fee.
- Make sure to keep the receipts for your premium payments, especially if you are paying in cash.
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Personal Liability Umbrella Policies
Theres another type of liability coverage that can protect your assets in the event youre in an accident: a personal liability umbrella policy.
Umbrella policies provide coverage above and beyond what your car liability insurance covers, especially if youre the target of a lawsuit after an accident involving your car, home or boat.
Learn more about umbrella policies offered by State Farm by contacting an agent.
Do I Need Rental Car Insurance If I Have Homeowners Or Renters Insurance
You typically will not need the Personal Effects Coverage. Your homeowners insurance policy can also protect you when you drive a rental car. Your policy might cover your belongings even when they arent in the home. If so, you dont need personal effects coverage.
For example, lets say you bring along an iPad, a designer purse, and your suitcase filled with clothes in your car. If someone breaks in and takes these things, insurance will reimburse you for your losses. There are just a couple of caveats.
First, high-end electronics and cameras usually arent covered unless youtake out a specific rideron them. Second, coverage is typically for personal purposes only. If youre on a business trip, you may have to look to your employers insurance for help.
Just like with health insurance, this type of coverage doesnt cover damage to anyones vehicle or any medical bills. Make sure you have enough coverage in those areas before setting off on your trip.
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Using Your Liability Insurance
This example illustrates how liability insurance is used and how not having enough liability insurance may lead to you paying out-of-pocket costs.
Susan is driving home from work and hits another vehicle. The other car is driven by a couple, Dan and Amy, with their child, Allison, in the back.
Susan has 50/100/50 in liability insurance.
- Dan injures his back, and his medical bills total $30,000.
- Amy breaks an arm and suffers internal injuries. Her medical bills cost $45,000.
- Allison breaks a leg, and her medical bills cost $7,000.
This scenario is covered by Susan’s plan because all three people’s injuries total $82,000, and Susan is covered for up to $100,000 per accident.
As a comparison, imagine there’s a fourth person in the car, Tony, and Tony’s medical bills total $40,000. Susan would then be on the hook to pay the extra $22,000 not covered by her liability insurance.
This also assumes no one in the car Susan hits sues her for lost wages or pain and suffering. Medical expenses add up quickly and can easily bankrupt you.
Do I Need Liability Coverage And What Is The Minimum Requirement
States vary in how much liability coverage they require, with most states requiring at least $15,000 in bodily injury coverage per person, $30,000 in bodily injury per accident, and at least $10,000 in property damage. The policy would read 15/30/10. Some states also require uninsured motorist coverage , underinsured motorist coverage and personal injury protection .
No matter your state’s requirements, you need to have liability insurance or very deep pockets, as it’s against the law in most states to drive without liability coverage. New Hampshire doesn’t require liability insurance, but they do require drivers to prove they have some means of financial responsibility if they cause an accident.
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Why Would Someone Only Carry Liability Insurance
What is liability only car insurance? This type of insurance covers a third party’s property damage and personal injuries in the event of an accident. Car insurance that only has liability coverage would not cover your injuries and personal property damage as the driver responsible for the accident.
How To Get Liability Insurance
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Why Should You Consider More Rather Than Less
While most states require drivers to carry basic liability insurance, which offers the minimum coverage limits required by law, its a good idea to purchase higher coverage limits than your state requires.
Why? Lets say you were distracted while backing out of a parking space and you didnt see a car behind you that happened to be driving by. And then you hit that car, slightly injuring the driver and her passenger.
After an investigation, youre determined to be at fault for the accident. Your auto liability coverage will pay for the damage to the car you hit as well as for the medical bills from the injuries sustained by the driver and the passenger, including pain and suffering, and lost wages.
If the damages you cause exceed the liability limits you have chosen, you could find yourself personally liable for all of the costs that exceed the amount your insurance policy can pay. If youre unable to pay those bills, it could result in garnished wages, liens against your assets and even court fees.
To fully understand the difference between minimum liability coverage and the amount of coverage you may actually need, contact a State Farm agent.
Obtain Information About The Driver And Vehicle
Here are the key points you need to know about what car insurance requires:
- Every driver on the policy must provide basic information like their name, address, and date of birth.
- Information about all drivers covered by the policy, including their license numbers.
- An overview of the vehicle, including its year, make, model, identification number, and current odometer reading.
- Each driver on the policy is required to provide their driving history, including any accidents, traffic violations, and safe-driving courses they have taken.
- Your current insurer , including your current coverage limits.
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What Does Auto Liability Insurance Include
Liability coverage includes property damage and bodily injury coverages.
Property damage covers damage to the other party’s property. This could include damage to vehicles, a yard, light pole, or other property damaged because of the accident. Other things may include:
- A rental vehicle while the other person’s car is being repaired
- Diminished value, the difference between the value of the vehicle if there had never been damage and the value after repairs have been completed
Bodily injury covers injuries sustained by another person because of the accident. This can include:
States may have different requirements on who can file a bodily injury claim against you.
Is Liability Insurance Enough
It depends on the individuals specific situation and specific needs. However, in general, liability insurance can provide peace of mind by protecting individuals from potential financial damages that may result from legal claims made against them.
Additionally, liability insurance can help protect businesses from potential legal claims made against them by employees, customers, or others.
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I Dont Have Car Insurance Can I Rent A Car
Yes, you can. If you dont own a car, so have no need for car insurance, you can rent a car. You wont have as much protection as you would with a personal auto insurance policy. In these cases, wed recommend choosing car rental insurance. The car will automatically come with the local minimum coverage required by law. However, that may not be enough if you get into a serious accident. And if youre traveling out of the country, laws can vary wildly, so you may or may not be protected.
If you dont own a car and you plan to regularly rent or borrow a vehicle, you should look into non-owner car insurance. One of the benefits of this insurance is that it is generally cheaper than paying the rental companies insurance rates if you are a frequent car renter.
Liability insurance is typically the only required insurance coverage in each state, so most rental cars probably wont include collision or comprehensive insurance unless you add these on. Without your own policy to protect you, youre at risk for huge repair bills, so adding extra protection here is a great idea.
Medical Payments Coverage And Personal Injury Protection
Medical payments coverage covers medical expenses for you and your passengers no matter who caused the car accident. For example, MedPay covers doctors bills, ambulances, X-rays and surgeries. MedPay is not available in all states.
Personal injury protection coverage also covers medical expenses for you and your passengers no matter who is at fault. Some states require PIP insurance. In other states, PIP may be optional or not offered. PIP also pays for lost wages and other expenses, such as a cleaning service or child care if you cannot perform these tasks due to your injuries.
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How Much Cheaper Is Liability Vs Full Coverage
Liability insurance only helps cover damages for an accident that you caused as the driver. Full coverage car insurance policies usually include collision and comprehensive coverages. On average, full coverage car insurance costs $39 more per month or $470 more annually than a liability-only car insurance policy.
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Do You Need Liability Car Insurance
In a word, yes: Almost all car insurance policies must include some liability coverage.
Every state except Alaska, New Hampshire and Virginia requires all drivers to have liability auto insurance. Each state sets its own minimum car insurance requirements, and many require additional types of insurance.
These requirements are in place to protect drivers who aren’t at fault in a wreck. If youre in an accident and another driver is at fault, you should be able to get back up and running quickly. Liability car insurance makes this possible.
State Minimum Car Insurance Requirements
The list below shows the liability insurance minimums for every state. There are 12 “no-fault” states that require all drivers to carry personal injury protection to pay for their medical expenses if involved in an accident. A few states, such as Maine and New Hampshire, require medical payments , which provides some medical coverage if your or your passengers are injured in an auto accident.
Many states require you to carry uninsured motorist bodily injury /underinsured motorist coverage. Some states require uninsured motorist property damage .
While most but not all states require drivers to carry auto insurance, all states do have financial responsibility laws. New Hampshire and Virginia dont require car insurance, but its the easiest way to show financial responsibility.
* Florida doesn’t require bodily injury liability coverage, but many insurers only offer policies with at least minimum amounts of 10/20 of BI coverage.
** In New Hampshire auto insurance isn’t mandatory, but if you choose to buy insurance these are the minimum amounts.
*** Rhode Island doesn’t require drivers to buy UM/UIM coverage if buying minimum liability coverage. If you buy higher liability limits, UM is required.
**** You can drive without insurance in Virginia but you have to pay an uninsured motorist fee of $500.
*****Full PIP can be waived in Maryland for a limited PIP option.
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