The Cheapest (and Best) Full Coverage Car Insurance of 2022 – ValuePenguin

What's the average cost of full coverage car insurance? Full coverage car insurance costs $2,058 a year on average, or $171 a month . But some drivers can find rates as cheap as $109 a month from companies like State Farm

What is a full coverage policy, and is it worth it?

Given that a full coverage insurance policy is two and a half times as expensive as a liability-only policy, you’ll want to make sure the extra cost is worth it.

Collision and comprehensive coverage protect your vehicle against physical damage, whereas liability coverage protects other drivers’ vehicles.

You should start to consider dropping your full coverage policy with comprehensive and collision insurance when you can reasonably afford to replace your car if you have to.

The exact point at which this occurs depends on your financial situation and comfort with risk. As a rule of thumb, you should consider dropping full coverage when the value of your car is between four and six times the cost to add comprehensive and collision coverage. That tends to be when your car is between 8 and 12 years old and worth approximately $5,000-$10,000.

What is a full coverage policy?

The most common understanding of a full coverage policy is one that includes comprehensive and collision insurance. These coverages are optional, as state laws do not require them as part of an auto insurance policy. They may be required if you have a car loan or lease.

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Collision and comprehensive insurance both have deductibles associated with their coverage. A deductible is how much you have to pay before your insurance starts covering damage to your vehicle. To use a simplified example, if your $5,000 car is totaled and you have a deductible of $1,000, your insurer will send you $4,000 to cover the cost of replacement. You will have to pay the remaining $1,000 out of pocket.

What other coverages could be included in a full coverage policy?

Sometimes when an insurer uses the term full coverage, it may be referring to a policy with the full suite of available coverages. In addition to liability, comprehensive and collision coverage, this could include:

Depending on which state you live in, you might be required to purchase those coverages.

Is a full coverage policy worth it?

Because comprehensive and collision protect the value of your car, it’s worth buying a full coverage policy if your car is still valuable enough that you can’t readily pay for repairs. However, full coverage becomes a worse deal over time, as the price of full coverage insurance drops more slowly than the value of an aging car. We recommend dropping full coverage when your car’s value (minus the deductible) is four to six times what you’ll pay for a year of coverage: Using the average cost of an Erie full coverage policy as a sample, here’s an example in which we’d consider dropping full coverage:

The smaller the payout you get if your car is destroyed, the lower the value of full coverage insurance. If you are risk-averse, you might wait until the value of your car is two or three times a year’s premium; if you are comfortable with risk or have a healthy emergency fund, you might drop full coverage once your car’s value is six or seven times what you pay per year to protect your car.

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If you have a less valuable car, the extra cost of full coverage won’t actually pay off if you’re in an accident. You are better off saving the money and putting it toward repairs or a new vehicle.

Several factors can affect the math that determines when it makes sense to have full coverage.

How to get cheap full coverage insurance

In the short term, there are two ways to get cheaper full coverage car insurance: shop around and reduce coverages.

Shop around to see if different insurance companies give you different full coverage rates, with the potential to get the same coverage for a lower price.

Reduce coverage you don’t need to lower your rates. You’ll get less protection from the insurer, but the trade-off may be worth it, depending on your personal situation.

How to shop around for full coverage insurance

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The goal of shopping around is to find equivalent insurance protection for a lower price. When comparing policies with different insurers, you should make sure that you:

If you follow these steps, you’ll find that different insurers will offer the same coverage for varying prices. The best and cheapest car insurance company for your neighbor may not be the same as the best one for you.

How reducing your coverages can lower your insurance premium

You can also lower your insurance premium by reducing your coverage. For example, you can:

However, keep in mind that there is risk associated with decreasing coverages. Although sometimes it may make sense to drop additional coverages that provide unnecessary protection, you also risk insufficient coverage after an expensive accident.

Increasing your deductible increases your out-of-pocket costs when making a claim, so you risk paying more from your savings after an accident. And decreasing liability limits could expose you to unexpected costs if your insurance isn’t enough to cover a major accident.

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