Do I need full coverage car insurance?

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In a nutshell...
  • If you have a lower limit, your insurance rates will be lower as well
  • If you have full coverage, then the vehicle will be covered in the event of an accident or theft
  • The car insurance company will only pay what the car is currently worth

It depends on your situation, but not everyone needs full coverage car insurance.

While full coverage is excellent to have since usually do not have to worry about paying anything out of pocket after you have paid your deductible, not all vehicles to warrant the extra expense.

If you are on a budget or have an older car, full coverage is expensive and may not make financial sense.

Keep in mind that insurance terms can be confusing and full coverage may not cover everything you expect to communicate with your insurance agent as to precisely what you want.

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What does full coverage car insurance refer to?

Each car insurance company has different definitions of what full coverage is. For some insurance companies, full insurance means that it includes comprehensive and collision coverage.

Collision coverage will cover vehicle damage that is caused by impact with another vehicle or object. Comprehensive insurance covers vehicle damage that is caused by other things such as weather conditions, vandalism or broken glass.

For many drivers, they want more coverage than just comprehensive and collision. If this is the case for you, make sure to let your insurance agent know that you wish to true full coverage.

True full coverage includes things like coverage for uninsured or underinsured motorists, rental reimbursement, towing and roadside assistance, gap insurance, and windshield coverage.

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In which cases do you need full coverage car insurance?

In most cases, when you are looking for car insurance, you can choose whether you want full coverage or not. There are some instances, however, in which you will be required to carry both collision and comprehensive insurance.

If you lease a new or used vehicle, the company that you are renting the car from will usually require you to carry full insurance coverage.

Also, if you buy a new car and are financing it, the bank that is loaning you the money will often require you to have full coverage on the vehicle.

If you total your car in an accident or it is stolen, you perhaps would choose not to continue paying the loan, and the bank would not be able to take the vehicle back or get any money from it.

If you have full coverage, then all or most of the vehicle would be covered in the event of an accident or theft.

When do you not need full car insurance coverage?

If you own your car and are not making any payments on it, you have the choice whether or not you want to have full coverage on the vehicle.

If you do not have a lot to spend on car insurance every month, you may choose only to have the minimum insurance requirements that are set by your state.

In many instances, what you pay for your insurance premiums would be more than what the insurance company would pay if you were in an accident or it is stolen.

The car insurance company will only pay what the car is currently worth and, after paying your deductible, there may not be a whole lot more to cover by the insurance company.

For example, if you drive a car that is only worth $1200 and your deductible is $1000, the insurance company would just cover $200 for repairs or replacement.

Is it possible to have cheap full coverage car insurance?

If you decide to have full coverage on your vehicle but want to keep your insurance premium lower, there are a couple of ways to accomplish this.

Your deductible amount will affect how much you pay for your insurance. If you have a higher deductible, which refers to the amount you spend out of pocket before the insurance company starts paying, your insurance rates will be lower.

You also can choose what your insurance limits are. This refers to the maximum amount that the insurance company will pay for property damage and bodily injury.

Deciding on insurance coverage can be a confusing and daunting process so make sure you speak with your insurance agent and get precisely what you want.

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