Do you need full coverage on a financed car?
You will always need full coverage on a financed car. If you don’t get full coverage on your financed car, your lender could cancel your loan and repossess your vehicle.
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Brad Larsen
Licensed Auto Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Auto Insurance Agent
UPDATED: Mar 23, 2024
It’s all about you. We want to help you make the right cheap car insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare cheap car insurance quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.
UPDATED: Mar 23, 2024
It’s all about you. We want to help you make the right cheap car insurance coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare cheap car insurance quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Drivers who finance their cars are required to have full coverage
- On average, full coverage car insurance is $94 a month
- Geico is one of the cheapest companies for full coverage insurance
Did you know that finance companies and lenders require you to have full coverage on your car? But how come?
Full coverage produces expensive car insurance quotes, and some drivers decline full coverage insurance to save money. But don’t worry, we’ll show you which insurance companies provide affordable rates.
Our guide shows why lenders make full coverage mandatory for your financed car and where you can get cheap full coverage car insurance rates.
If you want to shop for full coverage for your financed car right now, enter your ZIP code above to compare multiple insurance companies in your area.
Do you need full coverage on a financed car?
Yes, you do. Liability-only car insurance covers damages and injuries to other drivers. But full coverage adds a layer of protection that pays for damage to your vehicle even if you’re at fault in an accident.
Some insurance companies may even suggest you raise your coverage limits just in case your car is involved in a total loss accident.
Why do I need full coverage on a financed car?
Although you own the car, the lender is the title holder and insists that you get full coverage to protect the investment. Full coverage also ensures that you can avoid costly out-of-pocket expenses for repairs.
You should consider GAP insurance, too. If you get into a total loss accident, GAP insurance can pay for the remaining balance of the loan you owe. (For more information, read our “Does GEICO offer GAP insurance?“).
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What is full coverage and how do you get it for a financed car?
Full coverage insurance is a combination of comprehensive, collision, and liability coverages. Each coverage provides something different and together they fully protect you and your vehicle.
In addition to multiple options, full coverage auto insurance may be the most expensive option you see.
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You can get full coverage right after you receive your car insurance quote. There should be multiple selections, and full coverage insurance will be among them.
Once you decide on a quote, you can send your request to the car insurance company and wait for them to finalize your insurance policy.
What if you don’t get full coverage on a financed car?
Some lenders will cancel your loan and repossess your financed vehicle. Other lenders may buy insurance for you, but the lender adds the cost of insurance to your monthly payments.
How much is full coverage insurance for financed cars?
The cost of full coverage car insurance is based on several factors, but where you live is one of the most significant determining factors.
Full coverage is $94 per month on average, but states like Michigan and Louisiana have higher than average rates.
Let’s look at the cost of full coverage based on projections from the latest National Association Insurance Commissioners (NAIC) report.
NAIC Average Monthly Rates by Coverage Type and State
| States | Average Monthly Liability Rates | Average Monthly Collision Rates | Average Monthly Comprehensive Rates | Average Monthly Full Coverage Rates |
|---|---|---|---|---|
| Alabama | $39 | $30 | $14 | $83 |
| Alaska | $47 | $31 | $12 | $91 |
| Arizona | $50 | $26 | $17 | $92 |
| Arkansas | $37 | $30 | $18 | $85 |
| California | $47 | $38 | $8 | $93 |
| Colorado | $52 | $26 | $20 | $98 |
| Connecticut | $62 | $33 | $11 | $106 |
| Delaware | $71 | $28 | $11 | $110 |
| District of Columbia | $61 | $42 | $19 | $122 |
| Florida | $79 | $28 | $11 | $118 |
| Georgia | $60 | $32 | $14 | $106 |
| Hawaii | $39 | $28 | $9 | $76 |
| Idaho | $33 | $21 | $11 | $65 |
| Illinois | $41 | $28 | $11 | $80 |
| Indiana | $35 | $23 | $11 | $69 |
| Iowa | $28 | $20 | $17 | $65 |
| Kansas | $33 | $23 | $22 | $78 |
| Kentucky | $48 | $25 | $13 | $86 |
| Louisiana | $77 | $38 | $20 | $135 |
| Maine | $31 | $24 | $9 | $63 |
| Maryland | $58 | $33 | $13 | $104 |
| Massachusetts | $53 | $35 | $12 | $100 |
| Michigan | $74 | $38 | $13 | $126 |
| Minnesota | $40 | $21 | $17 | $78 |
| Mississippi | $42 | $30 | $19 | $91 |
| Missouri | $40 | $25 | $17 | $82 |
| Montana | $35 | $23 | $22 | $80 |
| Nebraska | $34 | $22 | $21 | $76 |
| Nevada | $68 | $28 | $10 | $106 |
| New Hampshire | $35 | $27 | $10 | $72 |
| New Jersey | $77 | $34 | $11 | $121 |
| New Mexico | $46 | $25 | $16 | $87 |
| New York | $73 | $36 | $15 | $124 |
| North Carolina | $31 | $27 | $11 | $69 |
| North Dakota | $25 | $22 | $21 | $68 |
| Ohio | $36 | $24 | $11 | $71 |
| Oklahoma | $41 | $28 | $21 | $90 |
| Oregon | $55 | $22 | $8 | $85 |
| Pennsylvania | $44 | $30 | $13 | $88 |
| Rhode Island | $71 | $38 | $11 | $121 |
| South Carolina | $53 | $25 | $16 | $94 |
| South Dakota | $27 | $19 | $25 | $72 |
| Tennessee | $38 | $28 | $13 | $79 |
| Texas | $51 | $35 | $20 | $106 |
| Utah | $47 | $24 | $10 | $81 |
| Vermont | $31 | $27 | $12 | $69 |
| Virginia | $39 | $25 | $12 | $76 |
| Washington | $55 | $25 | $9 | $89 |
| West Virginia | $43 | $29 | $18 | $89 |
| Wisconsin | $34 | $20 | $13 | $67 |
| Wyoming | $29 | $24 | $24 | $78 |
| Countrywide | $50 | $30 | $13 | $94 |
Read more:
- Cheap Car Insurance in Wyoming
- Cheap Car Insurance in South Dakota
- Cheap Car Insurance in Oregon
- Cheap Car Insurance in North Dakota
- Cheap Car Insurance in New Hampshire
- Cheap Car Insurance in Alaska
- Nebraska Car Insurance
We included liability, collision, and comprehensive insurance to show you different portions of full coverage. These coverages don’t include other options like rental car reimbursement or GAP insurance.
Therefore, the price of car insurance will likely change when you shop at multiple different companies.
How much is full coverage at the best car insurance companies?
The company that provides your insurance policy is also a major factor in determining your costs. Some companies issue more affordable rates than others.
Check out the table below to see how the best car insurance companies in America compare to one another.
Car Insurance Rates by Company
| Companies | Monthly Car Insurance Rates |
|---|---|
| Allstate | $318 |
| American Family | $224 |
| Farmers | $288 |
| Geico | $179 |
| Liberty Mutual | $398 |
| Nationwide | $229 |
| Progressive | $283 |
| State Farm | $235 |
| Travelers | $287 |
| USAA | $161 |
USAA and Geico are the most affordable companies, but USAA car insurance is only available to veterans and their immediate families. So, most people who shop for car insurance will need to look at the other nine companies.
You may want to consider American Family, Nationwide, and State Farm if you want to save money on car insurance.
Read more: How much insurance coverage do I need?
Can I get cheaper insurance rates on a financed car?
Yes, you can. Drivers can qualify for discounts, which can lower car insurance rates by at least 15%. For example, a person with a clean driving record and good credit could save up to 30% on insurance.
Does insurance go down after you pay off your car loan?
No, it doesn’t, but you can shift from full coverage to liability-only car insurance. We recommend that you keep full coverage, especially if your vehicle was manufactured in the last five years. (For more information, read our “Does car insurance go down at 25?“).
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What is the bottom line?
You are always required to carry full coverage on a financed car. Full coverage insurance could protect you from expensive out-of-pocket costs and provide coverage even if you were at fault in an accident.
Lenders require you to have full coverage to protect their investment, but specific areas of full coverage may not pay for the loan if you get into a total loss accident. So, we recommend adding GAP insurance.
Before you buy full coverage for your financed car, use our free online tool below to compare multiple quotes from the best insurance companies near you.
Compare quotes from the top car insurance companies and save
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Brad Larsen
Licensed Auto Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Auto Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about car insurance. Our goal is to be an objective, third-party resource for everything car insurance-related. We update our site regularly, and all content is reviewed by car insurance experts.