Introduction
Perhaps one of the most important decisions car drivers must make when it comes to auto insurance is whether or not to choose full coverage, as opposed to the standard basic liability coverage. Full coverage is more extensive protection, but also more expensive. So is it worth the investment? Here we’ll take the pros and cons of full coverage auto insurance apart so that you can decide for yourself what suits your requirements and your finances.
What is Full Coverage Auto Insurance?
Full coverage auto insurance is not a type of policy per se. Rather, it’s a package of several types of coverage rolled into one. Full coverage usually consists of:
Liability coverage — Covers damages or injuries you inflict on others.
Collision coverage — Covers repairs to your car after a collision, no matter who was at fault.
Comprehensive coverage — Covers non-collision losses such as theft, vandalism, and natural disasters.
While liability coverage is mandatory in most states, collision and comprehensive coverage are optional unless required by your lender if you’re financing or leasing your car.
The Pros of Full Coverage Auto Insurance
- Protection Against Vehicle Damage
One of the biggest perks of full coverage is that it covers repairs or replacement of your car — even if the accident is your fault. Without collision coverage, you’d have to pay for these repairs out of pocket. - Covers Non-Accident Incidents
Total protection shields your vehicle from non-collision occurrences such as theft, vandalism, fire, or loss due to storm or falling debris. This will be a life-saver for you if you reside in an area with violent weather or theft-prone territory. - Peace of Mind
Full coverage insurance has you covered in almost every situation. If you run into a pole, get rear-ended, or wake up to find your car stolen, you’re protected. This sense of security is particularly important for newer or higher-end cars. - Protects Against Uninsured Drivers
Some full coverage policies include uninsured/underinsured motorist coverage. This helps if you’re hit by someone without insurance or with too little coverage to pay for your damages and injuries. - Helps With Loan or Lease Requirements
If you’re financing or leasing your vehicle, the lender likely requires full coverage. This ensures they’re financially protected if the car gets totaled before you’ve paid off the loan.
The Cons of Full Coverage Auto Insurance
- Higher Premiums
The most significant downside of full coverage is the cost. Because it offers more protection, it comes with higher premiums. This can be tough on your wallet, especially if you’re a safe driver who rarely files claims. - Deductibles Still Apply
Even with full coverage, you’re responsible for paying your deductible before insurance kicks in. If your deductible is $1,000 and repairs cost $1,200, you’ll still pay most of that bill out of pocket. - Overpaying on Older Cars
For older cars with very little market value, full coverage may not be worth the added expense. If your vehicle is valued at just $2,000 and you’re spending $600 annually on full coverage, you could be spending more than the car is worth in the long run. - Potential Rate Increases
Filing a claim — even if the accident wasn’t your fault — may cause premiums to increase. This applies to both liability and full coverage policies, but the greater expense of full coverage makes rate increases sting more. - Coverage Limitations
Full coverage isn’t covering you for everything. Many policies, for instance, won’t pay for mechanical failure, routine wear and tear, or personal items taken from your vehicle unless you purchase additional coverage.
Who Should Buy Full Coverage Auto Insurance?
Full coverage isn’t necessary for everyone. You should consider it if:
Your vehicle is new or worth a lot of money — Repair or replacement value would be high.
You’re financing or leasing your vehicle — Lenders typically require full coverage.
You live in a high-risk area — Think cities with high theft rates or regions prone to hurricanes or hailstorms.
You can’t afford to replace your car out of pocket — Full coverage can prevent financial hardship after an accident.
Conversely, if your vehicle is old and has low market value, liability-only insurance may be a better option. One rule of thumb: If your premium for full coverage costs more than 10% of your vehicle’s worth each year, it may be time to dial it back.
How to Reduce the Price of Full Coverage Auto Insurance
If complete coverage sounds enticing but cost is keeping you back, consider the following ways to reduce your premium:
Increase your deductible — The higher your deductible, the lower your monthly premium. Just make sure you can pay the deductible if you have to make a claim.
Bundle policies — Most insurers provide discounts when you package auto and home or renters insurance.
Inquire about discounts — Insurers give discounts for safe driving, good grades (for students), anti-theft devices, or defensive driving courses.
Keep your driving record clean — Accidents and tickets increase your premium. The more safely you drive, the less you’ll pay.
Check your policy periodically — As your vehicle gets older, you may choose to eliminate collision or comprehensive coverage to save money.
Conclusion
Full coverage auto insurance provides maximum protection, but it’s not necessarily the best option for everyone. If you own a newer, more expensive car — or if you wouldn’t be able to afford repairs or a replacement out of pocket — full coverage is a good idea. But for older cars with little market value, the added expense may not be justified. By balancing the advantages and disadvantages and taking your financial condition into consideration, you can make the optimal choice for your car insurance.