Driving comes with its fair share of risks, making car insurance a necessary part of being a responsible driver and car owner. Beyond being a legal requirement in most states, auto insurance provides financial protection against the expenses of unexpected events.
The concept of car insurance dates back to the early 20th century, as cars became more common on the roads. The need for financial protection against accidents and damages to people and property led to the development of all types of coverage.
Today, full-coverage car insurance has evolved to include a wide range of protections, ensuring drivers are well-prepared for nearly any risk out there.
Keep reading to explore the details of full-coverage car insurance, including its components, benefits, and comparisons to other types of insurance.
What is full-coverage car insurance?
Full-coverage car insurance is a comprehensive policy that includes multiple types of protection to cover various risks. It typically includes property damage liability, bodily injury liability, comprehensive coverage, and collision coverage. These elements work together to provide a strong safety net for drivers.
What many car owners like about full-coverage car insurance is that it goes beyond the minimum insurance requirements set by states. And that’s really important in 2024 when the average price of a new car in 2024 is $47,000, according to Fortune. You want to protect that investment.
Plus, full-coverage car insurance is particularly important for newer or higher-value vehicles, with all their bells and whistles and computer-connected safety features that can cost a lot to fix or replace.
What does that look like in today’s world? As recently as 2022, the average auto liability claim for property damage was more than $5,000, while the average auto liability claim for bodily injury was over $24,000, according to the Insurance Information Institute. Without full-coverage car insurance, the financial burden of either of these issues — and likely both — would be all on you.
What does full-coverage car insurance include?
Full-coverage car insurance is made up of these key components:
- Property damage liability: This coverage extends to damages caused to another person’s property in an accident where you are at fault. This includes repairs to vehicles, buildings, and other structures.
- Bodily injury liability: This protection is designed to cover medical expenses, lost wages, and legal fees in the event that you cause injuries to others in an accident. It provides financial protection for third parties while helping you avoid significant financial liabilities resulting from lawsuits or claims.
- Comprehensive coverage: This component of full-coverage car insurance protects you against non-collision incidents like theft, vandalism, fire, or natural disasters. It ensures that you are covered up to the actual cash value of the vehicle, safeguarding your investment and financial stability.
- Collision coverage: This coverage addresses the cost of repairing or replacing your car if it’s damaged in a collision with another vehicle or object, regardless of who’s at fault. Collision coverage is tapped when a vehicle sustains damage from rear-end accidents, fender benders, side-impact collisions, or collisions with stationary objects like trees or guardrails.
In addition to the core coverages mentioned above, your insurer may offer an assortment of add-on coverages for even more protection. Here are the most common (and popular).
- Roadside assistance provides coverage for service in case of breakdowns, flat tires, or other roadside emergencies, including services like towing, battery jumps, fuel delivery, and lockout assistance.
- Rental car reimbursement covers the cost of a rental car while your wheels are being repaired after an accident. This ensures that you have alternative transportation during the time it takes to repair your car — within limits.
- Uninsured/underinsured motorist coverage protects you if you are involved in an accident with a driver who doesn’t have enough insurance to cover the damages — whether it’s medical expenses, vehicle repairs, or both.
- Personal injury protection (PIP) and medical payments (MedPay) coverage help with medical expenses—like emergency room bills, ambulance fees, rehab, and other healthcare costs—for you and your passengers in the event of an accident, regardless of who is at fault.
Understanding the different parts of full-coverage car insurance, including basic and extra coverages, helps you evaluate just what protection you think you’ll need on the road.
What if I opt for just liability-only coverage?
Before deciding to forgo full-coverage car insurance, it pays to fully understand the differences between bodily injury liability and property damage liability insurance. While liability-only coverage meets the minimum legal requirements and protects you from financial liability to others, it doesn’t cover everything.
What does liability-only coverage provide?
- Bodily injury liability. This coverage protects you financially if you injure someone else in a car accident. It covers medical expenses, hospital bills, rehabilitation costs, lost wages, and compensation for pain and suffering. It also can provide legal defense if you are sued due to the accident.
- Property damage liability. This covers the repair or replacement costs for damages you cause to someone else’s property in an accident. It protects you financially against claims for damaged vehicles, buildings, fences, and other property. Without this coverage, you would have to pay for these expenses out of pocket, which could be financially draining.
What doesn’t liability-only coverage provide?
- If there’s a collision with another vehicle or object and you’re at fault, liability-only coverage won’t pay for your car repairs.
- If you’re involved in a hit-and-run or the at-fault driver doesn’t have enough insurance (or none at all), liability-only coverage won’t help.
- If damage is caused by something other than a collision, such as theft, vandalism, fire, or weather, it isn’t covered under liability-only policies.
Are there required minimums for liability insurance?
State minimum requirements for bodily injury and property damage liability insurance vary by state and dictate the minimum coverage needed to legally operate a vehicle. For instance, a state might require minimum bodily injury liability coverage of $25,000 per person, $50,000 per accident, and $20,000 for property damage liability. These amounts represent the maximum amount the insurer will pay for damage claims per accident.
It should be noted that if you live in New Hampshire and Virginia, you’re not required to have car insurance. But you’re still liable for any damages you might cause in an accident.
That said, state minimums may not offer enough protection if you’re involved in a severe accident. It’s always good to consider higher coverage limits for better financial protection — and full-coverage car insurance.
What if I add collision and comprehensive coverage?
That’s the advantage of full-coverage car insurance. It not only meets the legal requirements of bodily injury and property damage liability coverage; it also provides collision and comprehensive coverage.
Let’s look at the differences between collision and comprehensive coverage:
Collision coverage:
This insurance handles damages to your vehicle caused by collisions with other vehicles or objects. It ensures that regardless of fault, your vehicle’s repair costs are covered, allowing you to quickly get back on the road without breaking the bank.
For example, if you rear-end another vehicle at a stop sign, collide with a guardrail while taking a sharp turn, or hit a parked car in a crowded parking lot, collision coverage will assist with the repair expenses. Even in more severe accidents, like where you hit another car or if your vehicle rolls over, collision coverage steps in to cover repair costs.
Comprehensive coverage:
Comprehensive protection covers your car from any non-collision damage. Imagine waking up to find your car stolen, returning to your parked car to discover it’s been vandalized, or finding it damaged by a freak hail storm or a fallen tree branch. Comprehensive coverage pays for repairs or replacements in these situations, as well as damage caused by fire or flood.
What influences the cost of collision and comprehensive coverage?
The cost of comprehensive and collision coverage is influenced by various factors, including the following.
- Your car’s value: A newer, more expensive car typically requires higher coverage limits for both comprehensive and collision coverage. This is because the cost to repair or replace a newer vehicle in the event of an accident or theft is higher than that of an older or less valuable vehicle.
- Your driving history: Drivers with a history of accidents or traffic violations may face higher premiums for both comprehensive and collision coverage. Insurance companies consider such drivers to be at a higher risk of filing claims in the future, leading to increased premiums. On the other hand, if you only use the car to commute short distances, handle local shopping, and shuttle your kids around town, this coverage might be a little less.
- Your location: Where you primarily drive and park your car can also impact the cost of comprehensive and collision coverage. Urban areas with higher rates of vehicle theft, vandalism, and accidents tend to have higher insurance premiums compared to rural areas with lower rates of these incidents.
- The deductible you choose: Opting for a higher deductible typically lowers your premiums, as you’ll be responsible for paying more out of pocket before your insurance coverage kicks in. Selecting a lower deductible will result in higher premiums but reduces your financial responsibility in the event you need to make a claim.
Generally, comprehensive coverage tends to be pricier than collision coverage because it covers a broader range of risks. So, when deciding on which coverage you need, consider the potential financial impact of repair or replacement costs alongside the available premium and deductible options.
What about additional coverage and policy add-ons?
Let’s look at the most popular policy add-ons beyond the basics of liability, collision, and comprehensive coverage.
- Roadside assistance: Chances of a flat tire or dead battery? Roadside assistance can provide towing, jump-starts, fuel delivery, and other emergency services to get you back on track.
- Towing: This coverage ensures that if your breaks down and needs to be towed to a repair shop or another location, the cost is covered.
- Rental car reimbursement: If your car is undergoing repairs after an accident, rental car reimbursement coverage can help cover a temporary means of transportation.
- Uninsured/underinsured motorist coverage: If you’re involved in an accident with a driver who lacks adequate insurance, this policy add-on helps cover your medical expenses and car repairs.
- Personal injury protection (PIP) and medical payments coverage (MedPay): In the event of an accident, PIP and MedPay can help cover medical expenses, ambulance fees, and other healthcare costs resulting from an accident, regardless of who is responsible. These coverages extend to you and your passengers. PIP is mandatory in about 20% of the U.S., while in the remaining states, you can opt for MedPay coverage. On average, PIP costs just $15 per month, making it an affordable add-on to full-coverage insurance.
Compare full-coverage car insurance costs with liability-only options.
When considering car insurance costs, it’s important to compare the benefits with the premiums. Full-coverage car insurance usually costs more than liability-only policies because it offers more expansive protection. However, for drivers with newer or more valuable cars, the extra coverage can be worth the higher cost.
In 2024, Bankrate discovered that the cost of full-coverage insurance is typically $2,299 per year ($192 per month), while liability-only coverage averages about $637 annually ($53 per month).
Because rates can vary based on factors like your location, your age and driving record, and the make, model, and age of the vehicle, it’s impossible to pinpoint costs for every driver. So, let’s examine examples from a few states to see how prices for full-coverage car insurance and liability-only insurance may differ.
| U.S. State | Full-Coverage Premium | Liability-Only Premium |
| North Carolina (NC) | $1,775 / $148 per month | $522 / $44 per month |
| South Carolina (SC) | $1,893 / $158 per month | $606 / $51 per month |
| Pennsylvania (PA) | $2,490 / $208 per month | $520 / $43 per month |
| Virginia (VA) | $1,963 / $164 per month | $677 / $56 per month |
| Illinois (IL) | $2,068 / $172 per month | $553 / $46 per month |
Choosing between full-coverage car insurance and alternatives
Deciding between full-coverage car insurance and exploring alternatives is a personal choice. But we can help you consider all the factors that go into making that decision.
Take into account the following:
- How much are your wheels worth? If you bought a new, classic vintage, or otherwise high-value car or truck, full-coverage car insurance will provide the extensive protection needed to safeguard your investment.
- What’s your financial situation like? Evaluate your ability to cover potential out-of-pocket expenses in the event of an accident or damage to your vehicle. Will the higher premiums that come with full-coverage insurance break your budget?
- Are there leasing/financing requirements? If you’re leasing or financing your vehicle, your lender may require you to maintain full-coverage insurance to protect your investment. Review the terms of your lease or loan agreement to ensure compliance with insurance requirements.
- Where do you park the car? Are you in a gated community? Do you have a private garage? Do you park on the street, where other parked cars could bump you?
- Where do you drive the most? Are you a highway driver, or are you mostly on city streets? Are drivers aggressive where you are? Is there a lot of traffic? How likely are you to have an offender bender?
Here are two scenarios illustrating the benefits and drawbacks of full-coverage car insurance versus alternatives.
#1 — Considering full-coverage car insurance: You drive a brand-new luxury car and opt for full-coverage insurance to protect your investment. Your monthly premiums are on the high side, but in the event of an accident, your insurance helps cover the cost of repairs or replacement after you pay the deductible. No worries.
#2—Considering the minimum insurance required: You drive an older vehicle that wouldn’t cost as much to replace, so you choose liability-only coverage to reduce your monthly insurance costs. While your premiums are lower, you’re assuming more financial risk in the event of an accident or other damage to your car. Drive safely and park in a well-lit area to avoid a break-in!
Guided Solutions can help.
The experts at Guided Solutions can help you decide between affordable full-coverage car insurance and other options. We’ll discuss your needs and budget to find the best fit. We’ll provide a quote after comparison shopping from the best insurance providers. With our guidance, you can choose the right level of protection for your driving.
Fill out our online quote form or call (833) 791-4719 for immediate assistance.