If you’ve ever shopped for car insurance, you may have come across the term “full coverage.” Yet, the term is really a misnomer since, within the world of automobile insurance, there exists multiple coverage options — similar to ordering food items off an a la carte menu. When bundled together, like a prefix meal, those multiple options then constitute “full coverage.”
While having insurance on your vehicle is mandatory, “full coverage” is completely optional as there are only a few options that are mandated a vehicle owner needs to carry. The most obvious example is no-fault insurance. Yet, just because you don’t have to have something doesn’t mean you shouldn’t.
What Is Full Coverage Car Insurance, Exactly?
Full coverage car insurance is a policy that includes bodily injury liability (BI), property damage liability (PD), under/uninsured motorist insurance (UMI), collision, comprehensive and, sometimes, personal injury protection insurance (PIP). Those various parts, each of which offers the benefits inherent in insurance coverage, are more useful to different people depending on where you live, how you drive and your personal financial situation.
Bodily injury and property damage are both liability insurances, which are used to pay for other people’s damages. BI takes care of their injuries while PD takes care of any car or structure damages. Only another driver can file a claim through them; their sole purpose is to ensure if you crash into someone, causing damage, you can pay for it.
The second part of full coverage has collision, comprehensive, (both optional) and personal injury protection — which is optional in 38 states — but required in Michigan. These insurance types are considered “first party benefits”; they are meant for the policyholder to use to pay for their own damages. For example, collision will allow you to pay for damage to your car, even if you were the one to cause it. Comprehensive covers damage to your car that is caused by an external force, such as a storm, vandal or the occasional errant baseball. Personal injury protection is meant to use to pay for your own medical bills if you are injured in an accident.
How Much Does Full Coverage Cost?
The latter parts of full coverage (collision, comprehensive and personal injury protection) are typically equal to, if not more than, the price of BI, PD and PIP. In five major cities, including Atlanta, Boston, Los Angeles, New York and Detroit, full coverage was on average more than twice as expensive than just state minimum coverage. (For car insurance in Massachusetts, full coverage was nearly three times more expensive, according to AAA.) Overall, according to a leading insurance industry group, the national average price for full coverage is around $1,520 annually for a 30-year-old male, but more than $7,000 for a 17-year-old male.
Clearly, full coverage is a luxury that will cost you significantly more than the minimum required by law. Again, the question becomes whether the added insurance is worth the cost. Granted, you may be an excellent driver who has never gotten as much as a parking ticket, and the chances of getting into an accident are statistically low, but the cost of just one accident can be enough to cause a catastrophic hit on your finances without adequate coverage.
Why You Should Consider Full Coverage
No one likes to think about getting into a car accident, but the aftermath is where you will want full coverage the most. Post-accident, there are going to be several things to take care of, including injuries and damages, both yours and the other driver’s.
If you opt for only the liability part of car insurance, you are essentially putting all hope in the other driver having enough coverage to pay for your injuries and damages, too.
Personal injury involving motor vehicles is a messy business and insurance companies are often looking for ways to deflect responsibility, which complicates the legality of fault. The best advice we can give you is to opt-in for “full coverage” if you can afford it, but don’t let insurance companies dictate how much you are owed should you become involved in an accident that you did not cause. For more information on your rights, call Turner and Turner for a free consultation at (248) 355-1727 or contact us online.