How Much Does Full Coverage Cost — Is Full Coverage Worth It

Deciding whether or not to buy extra insurance is a difficult choice to make. If you purchase coverage you never end up using, then you might feel like you’ve wasted your money. On the other hand, if you buy inadequate coverage, then you might find yourself wishing you had spent more money. But how much does full coverage cost?

It’s hard to shell out more money for a service you hope to never use, but it’s even worse to find yourself in a bad spot with no way out. If you want to protect your finances in every circumstance, you need full coverage car insurance.

How much does full coverage cost?

The average annual cost for full coverage ranges from $950 to $2,500m or between $80 and $250 a month, depending on the state in which you live. Costs also depend on the kind of deductible you have, how much coverage you choose to purchase, the kind of vehicle you have, and your driving history.

Some experts disagree on whether or not buying full coverage is worth the price if you have an older car. Financial coach Joshua Crum of Rebuild Repair Credit said he avoids buying it for his cars, which are typically more than 10 years old.

“Unless it’s required by a car loan I would avoid the expense,” he said. “The last insurance broker I discussed this with told me it was only worthwhile on a vehicle under two years old. On the other side of that, I’ve heard people who can’t drive well wreck their cars and get new ones, so it may be worth it if you’re a bad driver.”

But consumer savings expert Teresa Mears said she keeps full coverage on her 1999 Honda CRV and that “dropping collision would not save me enough to do it.” At the end of the day, it’s all about your risk tolerance. If you’re comfortable paying out of pocket in certain scenarios, there’s no need to be fully covered. If that potential makes you uncomfortable, you should consider comprehensive coverage.

What is full coverage car insurance?

There’s a minimum amount of coverage required to legally drive in every state. Most states require that you carry liability coverage, which pays for damages you cause during an accident. Mandatory coverage amounts differ, depending on your area.

Full coverage includes the optional features you can purchase, such as uninsured/underinsured motorist, comprehensive, and collision coverage.

Uninsured/underinsured motorist coverage protects you and your car in the event that you’re injured by a driver who has no coverage or limited coverage. Without this coverage, you have to pay for expenses yourself if you receive damage from a driver whose insurance won’t cover the accident.

Comprehensive coverage protects your vehicle in case of a flood, theft, fire or other forms of damage, not including collision. For example, if a telephone pole falls on your vehicle, only comprehensive coverage will cover any expenses.

Collision coverage pays for any damage that happens to your car during an accident. If the car is totaled and you have collision coverage, the insurance company will pay out the value of your vehicle. Unless you own your vehicle, collision coverage might be required by the bank or lender who’s in charge of your car loan. That kind of coverage provides reassurance that, in the event of your car needing to be replaced, their collateral is still protected.

 

3 ways to decrease the cost

Interested in getting full coverage, but scared of what you’ll have to pay? Here are some strategies to decrease the cost.

  1. Bundle your services.Bundling various insurance policies under one policy will often save you around 10% off your total monthly premium. You can usually add renters, homeowners, umbrella, life insurance, and more to one policy. Bundling also simplifies your payments and makes it easier to track your claims.
  2. Increase your deductible. You can increase your deductible if you still want to have full coverage, but don’t want to pay more than absolutely necessary. Call your insurance agent to ask how your premiums will change when you increase the deductible. Remember, it’s good to have the amount of the deductible saved so that if you do have to file a claim, you can afford to pay it in cash.
  3. Compare providers. Each insurance provider will have their own rates, so don’t settle for the one you already have. Call each company individually and ask how much they charge for full coverage. Make sure to compare limits, premiums, and deductibles evenly. You can find a list of providers here.

Bottom line, full coverage car insurance is a good idea if you want total peace of mind. No matter what happens to your vehicle, you’ll be taken care of. However, it may be overkill if you have an older car.

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