Ideally, you should use the 10% rule to determine whether to drop your full coverage. This principle states if your annual premium is more than 10% of your car's total worth, it's time to drop the coverage. Of course it also depends on several other factors, such as your vehicle's age, your financial state, and whether your vehicle is paid off.
Insurance mandated by state law is generally basic liability insurance, which covers bodily injury and property damage in an accident. Full coverage includes a range of coverage options that extend past what is required by law. This type of coverage varies but provides many opportunities for better protection and peace of mind.
Full coverage can include:
Remember, there's no single policy considered "full coverage." Your price depends on a variety of factors, such as:
The average annual rate for full coverage car insurance is $1,548 compared to the moderate basic liability coverage of $620. Here are a few policy price statistics broken down by state:
Technically, you only need basic insurance. Every state except Florida requires bodily injury liability, and all 50 states plus Washington, D.C. requires property damage liability. While full coverage isn't mandatory, it's a good idea for those who:
The 10% rule simply states that if your annual premium is more than 10% of what your car would be worth in the event it's totaled, you're paying too much for coverage. For example: if your premium's $300 and your car is worth $3,000 with a deductible of $1,000, you would only be getting $2,000 if your car were totaled. In this case, it might be in your best interest to drop your full coverage and stick to liability only.
When you're looking into purchasing a new policy, here are some things you need to take into account.
Once you assess all of the above, it should give you a better idea of whether full coverage or basic insurance is right for you.
When it comes to car insurance, there are several factors to consider beyond monthly cost. A policy that covers you when you need it, has a low deductible, and offers several discounts can be hard to find - which is why we've done the work for you.
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