What Is Full Coverage Car Insurance?

Full coverage car insurance usually refers to an auto insurance package composed of collision, comprehensive, and liability coverage. However, there is no standard definition of “full coverage car insurance,” and no policy you can purchase by this term.

Indeed, what is considered full coverage car insurance varies by state. Some lenders and employers may require you to carry full coverage car insurance.

In everyday language, full coverage auto insurance provides you peace of mind for many potential situations. But it doesn’t cover everything that you might expect from a “full coverage” policy and you’ll still need to cover your deductible amount.

Here’s what you need to know.

Key Takeaways

  • Full coverage is generally used as a term to apply to coverage that meets state minimums plus collision and comprehensive coverage. 
  • Full coverage may be required if you finance or lease a vehicle and for some jobs. 
  • Consider medical payment coverage, roadside assistance, gap insurance, and other policy options.
  • Full coverage can benefit vehicle owners hoping to avoid large out-of-pocket repairs.

What Full Coverage Car Insurance Covers

Depending on your state, you’ll likely find several types of coverage included in a full coverage car insurance policy: liability, collision, and comprehensive coverage. It is important to understand what’s included in a “full coverage” policy and how it’s defined.

Liability Coverage

In most states, if you’re at fault in an accident, liability coverage helps cover the other party’s injuries and property damage costs. For example, your liability auto insurance may cover the other driver’s medical bills, vehicle repairs, other property repairs, lost wages, and legal expenses in the case of a lawsuit.

While liability coverage is mandatory in almost all states, the minimum required amounts vary by type, with bodily liability limits typically higher than physical damage limits.

Here are examples of those limits in California and Texas.

Bodily liability (injury or death of one person) Injury or death to more than one person Damage to property
California  $15,000 $30,000 $5,000
Texas $30,000 $60,000 $25,000

These limits may be much lower than the costs you’re responsible for if you cause an accident. Having “full coverage” can mean having more than the minimum required coverage. For example, the minimum bodily liability limit in California is $15,000. A “full coverage” policy may have a bodily liability limit of $100,000.

Higher limits afford you greater protection for any assets. If the other driver sues you for damages exceeding your limits, you could be required to pay out of pocket and lose your assets in a lawsuit. 

Collision Coverage

Collision coverage is an optional coverage type in most cases unless required by your bank or lender while you’re paying off a car loan. This coverage pays the costs to repair your vehicle if you’re at fault in an accident—for example, if you hit another car or a stationary object, such as a light pole or mailbox. 

Comprehensive Coverage

Comprehensive coverage pays for repairs to your vehicle if it’s damaged due to a cause aside from a collision with another car or stationary object. For example, many policies cover vehicle damage from fires, hail, floods, falling tree branches, glass breakage, hitting an animal, theft, and burglary. 

Note

Full coverage auto insurance may include low deductibles for the amount you pay before insurance kicks in to cover auto damage. For example, it might feature a deductible such as $500 for collision or $250 for comprehensive.

Additional Coverages by State

Some states require more coverage. One or both of these coverage types could also be included in any full coverage car insurance policy:

  • Uninsured/underinsured motorist coverage: Some states require you to carry uninsured/underinsured motorist coverage to pay your costs if you’re hit by a driver without insurance and are hurt or have property damaged. States may require insurers to offer the coverage, which you can then decline. 
  • Personal injury protection (PIP): No matter who is at fault, personal injury protection (PIP) coverage helps pay your medical bills, funeral expenses, and economic losses from lost work or needing help around the house. In some “at-fault” states, this insurance is required. Other states require insurers to offer the coverage—which you can always decline.

What Full Coverage Car Insurance Doesn’t Cover 

It’s important to understand that full coverage doesn’t mean you’re fully covered against every risk. Review all car insurance options carefully to understand what’s included and what’s not. All policies have exclusions, listing the types of events that aren’t covered, including:

  • Damage due to wear and tear: You’ll pay for this damage out of pocket.
  • Gap insurance: If you total a leased or financed vehicle and owe more than it’s worth, guaranteed auto protection (GAP, or gap) insurance will pay off the balance. Some lenders or insurers require full coverage to qualify for GAP insurance.
  • Rental car reimbursement: If you’re involved in a covered accident and your vehicle needs repairs, this coverage helps to cover the cost of a rental car. 
  • Roadside assistance or towing: If you find yourself out of gas, locked out of your vehicle, stuck with a dead battery, or need other help on the side of the road, roadside assistance coverage gets you help and reduces the costs.
  • New car replacement: If your new car is totaled within the first year, new car replacement coverage ensures you can replace it with one of the same value. You won’t have to worry about the depreciation impacting your settlement.

Full Coverage Car Insurance Cost

The average cost of car insurance (defined as liability, collision, and comprehensive) in the United States was $1,176 per year in 2019–2020, according to a National Association of Insurance Commissioners (NAIC) report published in 2023.

The premium you end up paying will depend on a variety of factors that are determined by state law, including your:

  • Personal characteristics: Age, driving experience, gender, location, marital status
  • Coverage: Coverage types, limits and deductibles, previous insurance coverage
  • History: Claims history, credit history, driving record
  • Auto: Miles driven, vehicle type, vehicle use

Getting several quotes for comparison is the best way to determine how much full coverage will cost. You can get quotes easily on insurance companies’ websites. If you are still trying to figure out where to start, check out our list of the best car insurance companies of 2024.

Note

You may be able to finance your first year of full coverage auto insurance premiums with your auto loan. 

When Do You Need Full Coverage Car Insurance? 

Full coverage car insurance is usually required when you finance or lease a vehicle. The lender or leasing company will want proof that your car has full coverage for the duration of your loan or lease term. If you don’t carry the insurance, the lender can buy it for you.

Additionally, you may need full coverage if you:

  • Drive an expensive car that could be costly to repair
  • Commute regularly in heavy traffic
  • Can’t afford or prefer not to pay repairs out of pocket
  • Live in a high-risk area due to weather, crime, or other elements such as many animals or overgrown trees
  • Have assets you wish to protect with higher limits

When You Don’t Need Full Coverage Car Insurance

You won’t be required to carry full coverage car insurance once your vehicle is paid off. At that point, it’s up to you if you want to keep collision and comprehensive coverage.

You likely won’t need full coverage car insurance if:

  • Your car’s actual value doesn’t justify the insurance costs.
  • You face few risks of vehicle damage.
  • You would prefer to pay for repairs out of pocket.
  • You would rather buy a new car if your current vehicle gets damaged. 

When Can You Drop Full Coverage Car Insurance?

You can drop collision and comprehensive car insurance once you no longer owe money to the lender for your auto loan. However, you may want to consider keeping these coverages if your car is more valuable.

Does Full Coverage Car Insurance Cover At-Fault Accidents?

Full coverage car insurance covers the costs to repair damage to your vehicle in an at-fault accident. However, in most states, it doesn’t include coverage for bodily injuries that you or your passengers sustained. In “no-fault” states, your auto insurance does cover your bodily injuries up to the limits purchased.

Is Comprehensive Car Insurance the Same as Full Coverage?

Comprehensive car insurance is one aspect of full coverage. Comprehensive coverage covers damage to your vehicle caused by an event other than a collision—such as damage from hail, fire, or a flood. It also covers theft and vandalism. Full coverage usually refers to a policy that includes state-required insurance plus collision and comprehensive coverage.

What Are the Disadvantages of Full Coverage?

Full coverage insurance’s disadvantages include a higher cost than basic liability coverage. In addition, it may give you the impression that the policy covers everything. But you may want to add other insurance types, such as guaranteed auto protection (GAP) or personal injury protection (PIP) insurance, to have broader coverage.

The Bottom Line

If you’re financing or leasing a vehicle, you’ll generally need full coverage. It can also be helpful after you own your vehicle if your car is expensive, if you face high risks of damage, or if you just want peace of mind. That said, look beyond “full coverage” to ensure you get all the protection you need, including adequate limits and coverage for your specific concerns.

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