“Full coverage” is a term most people are familiar with, but they may not know exactly what it means. When purchasing a car insurance policy, it’s important to know exactly what you’re paying for. By understanding your coverage, you can determine where you can change your coverage in order to save money on your premiums. Although you must carry basic liability insurance on any vehicle, other coverage is optional and purchased additionally. You can review your needs and decide how much coverage you can afford.

What is Full Coverage Car Insurance?

There are two types of coverage on your policy: liability and first-party coverage. Every coverage you carry will be used either to pay for damage to your vehicle or damage that you cause to someone else’s property. You also carry liability coverage that pays for injuries caused to other individuals. Liability insurance is required by law.

First-party coverage, however, is optional. First-party coverage pays for damage that your own vehicle receives, regardless of who is at fault for the accident. The main first-party coverage is collision coverage; this pays for damage caused to a vehicle when it is involved in an accident with another car, pedestrian or fixed object. You can also purchase comprehensive coverage, which pays for damage caused by natural occurrences or vandalism.

Generally, full coverage car insurance means that your vehicle carries liability and collision coverage; comprehensive may also be considered part of full coverage. In addition these, you can also purchase optional first-party coverage including personal injury protection, rental reimbursement and roadside assistance.

Bear in mind that you need to ask for these specifically, however, as they are not necessarily included in a full coverage policy. Just because you carry full coverage does not mean that your car insurance company will owe you a rental car, for example, and “full coverage” may mean a different thing at one company than it does with another. If you switch from one car insurance company to a different one, it’s a good idea to clarify exactly what coverage you are buying as you may not get an identical policy simply by asking for full coverage.

Do I need full coverage car insurance?

If your vehicle is older or doesn’t have much value, you may not need to buy full coverage car insurance. If a vehicle costs less to replace than it would to repair, that vehicle is not worth paying for in most situations. Additionally, if you only rarely drive the vehicle, you may not want to keep full coverage on the policy.

Newer vehicles or those with lien holders do require full coverage, however. Until your vehicle is paid off, you cannot drop the collision coverage from your vehicle. New vehicles should also be protected under full coverage as they will be extremely expensive to replace in the event of catastrophic damage.

Of course, vehicles without collision coverage cannot be repaired by the car insurance company if they are involved in a car accident. If the accident is not your fault, you may be able to file the claim through the responsible party’s insurance; this isn’t always possible, however, as some people do not have insurance. If your vehicle is involved in a hit-and-run accident, the damage also would not be covered by your car insurance company unless you had the correct coverage.

Unless you are completely comfortable with not having your vehicle repaired after an accident, you should not drop your collision coverage. It may be more affordable to pay premiums for liability insurance, but the cost of vehicle repairs may not be worth that sacrifice.

How much does full coverage car insurance cost?

Exact car insurance costs will vary from one person to the next, so figures are impossible to determine without receiving a personalized quote. Several factors are involved in determining rates: your driving history, what type of car you drive, where you live and how old you are, just to name a few.

The coverage you carry on your vehicle will play a role in the cost of your policy, however. The more coverage you include on your policy, the more the premiums will cost. Some coverage is more expensive than others. For example, collision coverage costs more than comprehensive. The cost of a coverage is also dependent on the amount of your deductible. The higher the deductible you agree to pay in the event of a claim, the lower your premium will cost.

You can usually expect full coverage to cost almost twice what basic liability does, depending on the deductible that you choose and what limits you select for your liability coverage. In some cases, you can save more money from lowering your liability limit than you can from dropping collision coverage.

When making changes to your policy, try different combinations of coverage, deductibles and limits until you can find a reasonable balance. Most insurance companies will allow you to change your coverage online. This enables you to try multiple combinations in order to find the one that you like and save that new policy.

If you are unable to alter your policy online, you can contact your insurance provider or local agent’s office and discuss your policy options. Your agent will be happy to discuss your policy with you and help you find a price point that fits with the amount of coverage that you need.