Complete coverage Car insurance refers to having all of the major components of car insurance, such as bodily injury, property damage, uninsured motorist, PIP, collision, and comprehensive coverage. Approximately half of those coverages are typically required by law. Having the entire package is known as “Full Coverage,” and some people choose it to gain greater financial protection. In this article, we go into detail about what full coverage entails and why you should consider getting it even if you don’t have to.
The first component of comprehensive coverage is liability Car Insurance.
Liability insurance covers damages you cause to another driver or their vehicle if you are at fault. It is the only type of car insurance that is required by law. The two main types of liability insurance are bodily injury (BI) liability insurance and property damage (PD) liability insurance. Bodily injury refers to injuries you cause to other drivers, whereas property damage refers to any damage you cause to another vehicle or structure. Neither coverage is intended to protect you or your vehicle; rather, it is intended to allow other drivers to file a claim against your insurer.
For example, if you were injured in an accident and required surgery, you would have to file a claim with the other driver’s BI insurance rather than your own BI coverage.
The most fundamental type of car insurance is one that includes these two coverages. Each state establishes a state minimum, which is written in three numbers, such as 25/50/25. The first two numbers refer to your BI coverage, with the first indicating the amount of insurance you have for one person in an accident and the second indicating the amount of insurance you have for the entire accident. The third figure represents your property damage liability coverage limit.
State minimums typically range from $10,000 to $50,000 for each state. Overall, liability is not the cheapest part of car insurance, but it is also not the most expensive. It will most likely cost less than an extra $100 per year to double your bodily injury limits. PD insurance is slightly more expensive than BI insurance, but it costs less to increase coverage.
Uninsured/underinsured motorist bodily injury and property damage insurance
Uninsured BI and PD coverage works exactly like BI and PD coverage, except it is only used if you are in an accident with a driver who does not have car insurance and is found to be “at-fault.” In most cases, you would simply file a claim with the other driver’s insurance company.
Because they do not have any, you must file a claim through your own Uninsured Motorist coverage. Underinsured Motorist BI and PD are used if the other driver has insurance, but it is insufficient to cover your expenses. You would first file for reimbursement up to the other driver’s limits, then seek reimbursement from your Underinsured Motorist for the remainder of the damage costs.
Some states require you to have some combination of these two coverages, while others make it optional. The amount you carry is typically proportional to the amount of BI and PD you carry. Furthermore, some states may only require BI Uninsured Motorist coverage, rather than both BI and PD.
Finally, the likelihood of being involved in an accident with an uninsured driver is low, which means you are less likely to file a claim. As a result, UM and UIM insurance are typically the least expensive components of “full coverage.”
The second component of comprehensive coverage is first-party benefits.
The second part of “full coverage” is comprised of several types of insurance included in first-party benefits. In most states, carrying first-party benefits coverage is optional. It is also more expensive in general, but its main advantage is that you can use it for your own damages and medical expenses much faster.
Personal Injury Insurance
Consider personal injury protection insurance to be BI for your own injuries.
If you were injured in a car accident, instead of filing a claim with the other driver’s BI insurance, you can file a claim with your own PIP to cover your medical expenses. The primary advantage of PIP is that it pays out regardless of who is at fault. PIP frequently overlaps with your own health insurance and serves as a useful supplement and extra protection.
Personal Injury Protection (PIP) is required in 12 states, but it is optional in the remaining 38. PIP is generally required in states where car insurance is more expensive. In Florida, you can expect to pay an extra $25 to $90 per year for PIP, though it should be noted that Florida insurance requirements include one of the lowest PIP limits among states that require PIP. The cost will most likely be higher depending on the limitations imposed by your state. In Michigan, for example, when state laws required drivers to carry unlimited PIP, annual costs could exceed $4,000 in some cases.
MedPay is similar to PIP insurance in many ways, except that it is not required in any state. MedPay is largely redundant in “no-fault” states, but it can be critical in states with low PIP limits or where PIP is expensive.
Comprehensive insurance and collision insurance
Consider collision insurance to be PIP for your vehicle. You can file a claim through your collision insurance to repair any damage to your car caused by an accident, regardless of who is at fault. You do not have to wait for the insurance company of another driver to pay out, which means your car can be repaired quickly.
The disadvantage of collision insurance is that it is usually the most expensive part of car insurance, accounting for more than half of the total bill. The price will be even higher for high-value vehicles. Fortunately, you can control the cost of your collision premium by selecting a high deductible. Deductibles typically range between $50 and $2,000.
The higher you choose, the lower your premium will be. Collision insurance is not legally required, but if you lease your car, the leasing company may require that you have it.
Comprehensive coverage is similar to collision coverage in that it only covers externally caused damage to your vehicle. A branch falling on your car, someone vandalizing your car, or an errant baseball going through your windshield are examples of “Acts of God.” These occurrences are mostly unavoidable. Comprehensive coverage is significantly less expensive than collision coverage, owing to the fact that the average comprehensive claim is much smaller than the average collision claim. A higher or lower deductible can also be used to control costs.
The total cost of comprehensive Car Insurance
The inclusion of collision and PIP/MedPay insurance makes full coverage insurance significantly more expensive than basic coverage. We obtained a quote for a 30-year-old male driver from New York to demonstrate how each individual component is priced. Full coverage (excluding PIP, which is required in New York) cost 86 percent more in this quote, adding an extra $251 per six months, or $502 for the year.
Why you should get comprehensive coverage
In the event of an accident, opting for only liability insurance and foregoing the “first-party” benefits of full coverage means dealing with another insurer rather than your own. Filing through someone else’s insurer increases the likelihood that your claim will be denied or that you will have to settle for less than you wanted. Filing through another insurer also necessitates proving who the “at-fault” driver is, which can be difficult in many cases and sometimes depends on the state you are in. Still, if full coverage is costly, is it even worthwhile to spend that much money on something?
We discovered that the average collision claim was $3,144 from 2004 to 2013, while the average comprehensive claim was $1,621. That means that if you were to be in an average accident, the damage could be around $3,100. If you were also the at-fault driver, you will be responsible for the damages. If your car is also your primary mode of transportation, it may affect how you get to work, which could cost you even more in lost wages. In 2014, the average car accident cost more than $60,000 in medical bills.
There is a risk in hoping that someone else’s insurance will cover the entire amount. Not to mention that if you go through another driver’s insurer, it can take weeks or months before you receive payment for your medical bills. At the very least, with PIP, you know you are covered up to a certain amount and can expect payment as soon as you file the claim.
How to Reduce the Cost of Full Coverage Car Insurance
Full coverage is expensive, but it can be less expensive. There are several things you can do to reduce your annual bill. The first is to keep your collision and comprehensive deductibles under control.
As previously stated, the lower the deductible, the higher the monthly payment. If you set aside some money in your savings account for your deductible, you may be able to increase it slightly and thus have lower monthly payments.
The next step is to apply for any discounts that you may be eligible for. Insurance companies, particularly large ones, offer well over 20 discounts for a variety of reasons. Whether you’re a proven safe driver, a good student, have completed a drivers education course, or can combine your car insurance policy with another insurance policy, the combined discounts can save you well over 20% on your yearly bill.
The final, and possibly best, piece of advice for lowering the cost of full coverage is to shop around. Quote comparison shopping can save you thousands of dollars on your car insurance bill each year. There are numerous companies competing for your business in any area, and their prices will most likely vary by several hundred dollars. If you do not compare quotes from several companies, you will never know if you are getting the best car insurance. We have always found a company in any given area that offers a price that is significantly lower than other competitors — you just need to be diligent enough to find them as well.