Full coverage car insurance costs more than a policy with only your state’s minimum car insurance requirements. However, that added coverage can play a vital role if you get into a car crash.
Liability insurance: For accidents that you’re at fault, liability insurance covers the cost of the other party’s injuries and car repairs. It also pays for your legal defense if you’re sued for the car accident.
Collision insurance: Covers the cost to repair your vehicle but doesn’t cover the cost of the other party’s vehicle damage. Collision insurance can pay for vehicle damage from another car hitting yours, or a situation where you accidentally back into a pole or accelerate into a building.
Comprehensive insurance: Covers car theft and damage to your car related to weather, fire, flood, vandalism and falling objects. It also covers damage from hitting animals such as deer.
Full Coverage Car Insurance Summary
Pays for others’ damage if you crash into their cars
Covers your car damage if you hit a pole, fence, house or other object
Pays other people if you hit their fence, house or other property
Covers theft of your car
Covers your car for fire, flood, vandalism and animal collisions
Covers your car damage from falling objects such as tree branches
How Much is Full Coverage Car Insurance?
Nationally, the average full coverage car insurance policy costs about $1,190 per year, according to the National Association of Insurance Commissioners.
Coverage Average annual premium per year
Source: National Association of Insurance Commissioners, 2020 Auto Insurance Database Report
What Does Full Coverage Car Insurance Consist Of?
Full coverage car insurance typically consists of three separate components: Liability insurance, collision insurance and comprehensive insurance. Here’s a breakdown of how each coverage type works.
All states except New Hampshire require car owners to purchase a minimum amount of liability car insurance. These minimum state requirements outline two types of liability insurance:
Property damage liability insurance covers damage done to another person’s property that you crashed into. This could include someone else’s car, mailbox, fence, garden gnome collection or building.
Here’s an example of how liability car insurance works.
If you cause a car accident which results in physical damage to the other driver’s car and injuries, the other driver can make a claim against your liability insurance for car repair bills and medical expenses. Your liability insurance would also pay for a legal defense, settlements and judgments if the other driver sues you.
But here’s a catch. If you don’t carry enough liability car insurance, you could be on the hook for any amount that’s above your policy limit. That’s why it’s important to purchase more than your state’s minimum requirements. For example, if you cause a car crash with multiple injuries, the medical bills could quickly exceed the minimum liability requirements.
Consider at least liability limits with $100,000 in bodily injury liability per person, and $300,000 per accident, and $50,000 and up for property damage liability. Drivers with high incomes and/or significant assets should consider higher amounts in case someone decides to sue, plus umbrella insurance.
Does Liability Insurance Cover My Car If Someone Hits Me?
Your own liability insurance only pays others for damage you do. It will not pay anything for your own car or your injuries.
If someone else causes an accident, their liability insurance should cover your car damage and injuries. But the other person’s insurance will only pay up the limits they bought. If the accident was expensive, their insurance may not be enough to cover all your bills.
In addition, many drivers hit the road without any auto insurance at all. If they crash into you, they have no insurance to pay for the damage they cause. You can sue another driver who causes a crash, but not all drivers have assets to use to pay for a lawsuit judgment.
Collision and Comprehensive Coverage
Collision and comprehensive coverage are important for covering damage to your own car. Your liability insurance won’t pay for any of your car damage. If you own your vehicle outright then this coverage is optional. Expect to have to buy them if you have a car loan or lease.
Collision insurance pays for damage to your car from crashes with any object, such as a pole or guardrail. Comprehensive coverage pays for car theft and repairs due to weather, animal damage, vandalism, fire, flood and falling objects.
For example, let’s say your car tires slipped on ice and you and ran into your neighbor’s fence. Collision coverage would pay for the repairs to your vehicle. Liability insurance would pay for the neighbor’s fence.
If you drove across a flooded street without realizing how deep it was, comprehensive coverage would pay for car damage.
Collision and comprehensive coverage both have a deductible, such as $500 or $1,000. That’s the amount of money deducted from an insurance check if you make a claim.
What is Recommended for Car Insurance Coverage?
Building out the best auto insurance policy usually requires adding a few more options to full coverage car insurance: Uninsured motorist coverage and personal injury protection. These types cover injuries to you and your passengers in different ways. In some states these are required.
Uninsured Motorist Coverage
Uninsured motorist coverage helps safeguard you against folks who are on the road with no auto insurance. Typically, if you’re injured in a car accident where the other driver is at fault, their liability coverage should cover your medical expenses. But if the other driver is uninsured, uninsured motorist coverage would help cover your medical bills.
A similar coverage, underinsured motorist coverage, pays your medical bills when the other driver is at-fault but doesn’t have enough liability insurance to cover your costs.
As with other kinds of auto insurance, these types pay up to the limit you have chosen. Buying low limits can mean you still have unpaid bills after an expensive car accident.
Medical Payments Coverage and Personal Injury Protection
Medical payments coverage (MedPay) covers medical expenses of you and your passengers no matter who was at fault. This can include ambulance, surgery and X-rays. It’s not available in all states.
Personal injury protection coverage (PIP) will also help cover medical expenses no matter who was at fault. Some states require PIP insurance. In other states it’s optional or not offered. PIP insurance can also pay for lost wages and for hiring help for tasks you can’t do because of an accident, such as child care.