Full coverage car insurance is not only getting covered for your required state minimum liability insurance, but also getting collision and comprehensive liability coverage too. What are these insurance coverages? Do you need full coverage? How do you save money on this kind of coverage?

Liability insurance is coverage that protects you from the cost of accidental damage you cause to others and their property while driving a car. This covers the cost of medical bills, general and special damages (wage loss, continuing medical care, etc.) and repair of property damaged in the accident. This coverage also entitles you to the cost of defense (paying for an attorney for you) if you are sued for the damage you cause in a car accident. If you cause a car accident, your own injury and property damage is not covered by this type of insurance. All states have set a minimum amount of coverage/financial responsibility for car insurance/financial responsibility.

Liability insurance coverage is usually listed with limits for bodily injury and property damage stated separately. For example, a 15/30/10 liability policy offers coverage up to $15,000 to one person for bodily injury, $30,000 for all bodily injuries to others, and up to $10,000 for coverage of property damage. You can also purchase a combined single limit policy, or CSL, which will cover all injuries and property damage up to the stated maximum caused by a single accident. This is also known as an “umbrella” policy.

Collision insurance covers damage to your car, regardless of who caused the damage. So, even if you caused the accident, it will cover repairs to your car. Collision coverage only covers the repairs to your car up to the value of your car at the time just before the accident. If your car is worth less than the cost to repair it after an accident (commonly referred to as “totaled”), a collision insurance policy will pay you the value of your car. No states require that you have this coverage – but you may need it for other reasons. For example, if you have a car loan or lease a car, you may be required by your lender to have this coverage.

Comprehensive insurance covers other non-accident related risks to your car. Sometimes this insurance is referred to as “other than collision” coverage. Liability and collision insurance policies exclusively cover car accidents. There are much exclusion to those types of coverage, such as fire, theft, weather damage (think of how hail can damage a car) or if you hit an animal while driving.

Do you need Full Coverage Car Insurance?

The first thing to consider is if you need all three types of coverage. You must have liability insurance or other evidence of financial responsibility. Liability coverage (or proof of financial responsibility) is required in all states; collision and comprehensive coverage are not legally required for you to drive a car. However, if you have a loan on your car or lease a car, all three types of coverage may be required as a term of your car loan or car lease.

If you own your car outright (no loan), you may also want to consider how much the car is worth today. It may be that an older car is just not worth the additional expense of collision and comprehensive coverage. The rule of thumb is if your car is worth less than $4000, full coverage including collision and comprehensive coverages may not be worth the money you would be spending on premiums. Even if your car is worth more than $4000, you may want to skip paying collision or comprehensive insurance if you can afford to pay the cost of car repairs out of your own pocket.

Biggest Money Saver When You Need Full Coverage Insurance…

You can save money on this comprehensive insurance by getting a policy with a deductable. What is a deductable? A deductible is the amount you agree to pay out of pocket for your own damages before the insurance company coverage pays. For example, you have $1200.00 damage to your car from a hailstorm. If you have comprehensive coverage with a deductible of $500.00, you pay the first $500.00, and then your insurance company pays the remaining $700.00 to repair the damage.

So, if you choose a large deductible, your full coverage will be cheaper. Deductibles vary with insurance companies but you can choose a low deductible of $200 to as high as $1500. If you know you can afford to fix your own car damages for amounts below your deductable, then it’s smart to save money by having a higher deductable. By choosing a higher deductable, you can save up to nearly 40-50% of the cost of collision or comprehensive insurance premiums. That’s a huge savings! But if you think that $1500 to repair your car is going to be a financial stretch, think of a more manageable deductable, such as a $250 deductable. You collision and comprehensive premiums will cost more, but then you won’t have to save up money to fix your car that you may not be able to drive while you’re saving.

Other Ways to Save:

  • Shop around – The best way to make find affordable car insurance is to shop around. When you contact different insurance companies to compare insurance rates, make sure you ask for the same type and amount of insurance coverage from each different company (like liability, collision and comprehensive insurance coverage), with the same deductibles and coverage limits so you can make accurate comparisons. See Car insurance types to learn more about the different types of car insurance. Getting rate comparisons is time well spent and money saved.
  • Think about the type of car you own. If you have a sports car or a car with four wheel drive, these are cars that typically cost more to insure than most 4-door sedans. If your car insurance is so expensive you have difficulty affording it, then maybe it’s time to find a less expensive to insure car.
  • Keep a good driving record – You can qualify for good driver insurance rate discount.
  • Combine all your all your insurance policies (home or renter’s, life, or any other insurance you have) with one insurance company. You can save on your yearly insurance costs by getting a discount for having multiple insurance policies with one company.
  • Track your mileage; if you only drive short distances (to and from work or around town), you may be able to save more on car insurance by showing your insurance company you drive limited miles.