Should I Get Full Coverage Auto Insurance?
What’s the difference between liability and full coverage for auto insurance, and do you need both? Getting the right auto insurance to fit your needs at the best possible price might be a confusing task at first glance but with the help of an auto insurance broker, you’ll be driving your new car in no time with just the right amount of coverage.
In America, liability car insurance is required by almost all 50 states. It’s mandatory that you have it and there is a state minimum insurance requirement as well. Liability insurance pays the other party for property damage and bodily injury if you get into an accident that is deemed your fault.
There is no such law mandating full coverage, that decision is left up to the individual. Full coverage would cover the driver at fault for property and bodily injury. Without it, however, you’ll have to pay full price out of pocket for the cost of repairs, medical bills or a whole new car if you get into an accident. Taking out full coverage will cost you more in premiums but could save you a lot of money in the long run if you ever get into a major accident.
Who Would Benefit Most From Full Coverage?
If you purchased your car with financing from a bank, meaning you took out a loan to buy the car, then you don’t have a choice. Your lender will make you get full coverage in order to protect the asset while you’re still making payments on it. If you paid for the car in full yourself, then you have the option of using full coverage only if it suits your needs.
To figure out if full coverage is right for you, ask yourself three questions. The first question is, can I afford to pay for a new car if this one is totaled? Buying a car isn’t cheap, besides a home it will probably be your largest financial investment. If you were to get into a wreck next week and total it, could you get another one this soon? If the answer is no, and you depend on your car for transportation, then you’re going to want full coverage.
The next question is, how expensive is your car? If you bought a cheap junker then maybe paying a high monthly premium isn’t in the cards for you. If you bought a brand new car or a more expensive used car then that’s an investment you’ll want to protect.
The final question is, how much risk are you willing to take? Insurance is really just paying to transfer your risk to another party. Some people are naturally more risk-averse than others. If not having coverage is going to cause you sleepless nights then it’s better to have peace of mind.