What is full coverage insurance?
Full coverage auto insurance is a policy that includes not only mandatory state coverages, such as liability insuranceLiability insurance covers sums that an insured becomes legally obligated to pay because of bodily injuries or property damage, or financial losses caused to other people. (and personal injury protection or other coverages in some states), but also comprehensive and collision coverageCollision coverage helps pay for repairs or replacement of your car if it's damaged in an accident, regardless of who is at fault and is subject to a deductible. to protect your car.
As a general rule, liability-only coverage protects others from damage you cause, while full coverage also protects your vehicle.
There's no specific definition of full coverage car insurance; what it looks like for you depends on your state and what coverage you need. While liability plus the addition of comprehensive and collision is what people typically mean by full coverage, you can add a lot more to create a policy with the maximum amount of coverage. Here's how that might look:
- High liability limits (say, $250,000 per person bodily injury, $500,000 per accident, $250,000 property damage)
- Collision and comprehensive coverage
- Uninsured motorist coverage (bodily injury, property damage or both, which is required in some states)
- Personal injury protection and medical payments (required in some states)
- Rental reimbursement coverage
- Towing and labor/roadside assistance
- Add-ons such as new car replacement, accident forgiveness and other options
- Custom equipment coverage
- Gap insurance
The main difference between liability-only and full-coverage car insurance is that full coverage protects your car no matter who is at fault.
What does full coverage car insurance cover?
Full coverage insurance covers at-fault accidents for injuries and damage to others and your vehicle. It doesn’t cover your own injuries in an at-fault accident unless personal injury protection is added (it’s required in some states and optional in others).
Here's a full breakdown of the coverages available on a full coverage policy.
- Liability coverage is a type of insurance that protects you if you accidentally cause harm to someone else or their property. It helps cover the costs of legal expenses, medical bills, or property damage for which you may be held responsible.
- Collision coverage pays for repairing or replacing your vehicle in the event of a collision, regardless of who is at fault.
- Comprehensive coverage covers damage to your car caused by events other than collisions, such as theft, vandalism, natural disasters, and incidents involving animals.
Optional coverages, unless required by law in your state, include:
- Uninsured/underinsured motorist coverage protects you if you're involved in an accident with a driver with insufficient or no insurance. This is required by law in some states.
- Personal injury protection (PIP) covers the medical expenses for you and your passengers, regardless of who is at fault. This is required by law in some states.
- Rental reimbursement coverage pay for a rental car if your insured vehicle is in the shop for repairs after a covered accident.
- Gap insurance covers the difference between the amount owed on a car loan or lease and the car's actual cash value if it's deemed a total loss
Learn more about what full coverage car insurance covers.
What isn't covered by full coverage?
Full coverage car insurance doesn’t cover everything. Common exclusionsItems that are specifically denied coverage under the terms of an insurance policy. For example, most auto insurance policies exclude coverage for normal wear and tear, drag racing and intentional acts. are:
- Racing or other speed contests
- Off-road use
- Use in a car-sharing program
- Catastrophes such as war or nuclear contamination
- Destruction or confiscation by government or civil authorities
- Using your vehicle for livery or delivery purposes; business use
- Intentional damage
- Freezing
- Wear and tear
- Mechanical breakdown
- Items stolen from the car (those may be covered by your homeowners or renters policy)
- A rental car while your own is being repaired (an optional coverage)
- Electronics that aren’t permanently attached
- Custom parts and equipment (some small amount may be specified in the policy, but you can usually add a rider for higher amounts)
Remember that full coverage isn't an official term; your full coverage policy may not include all available coverage. Look at all your coverage options to ensure you know what's covered and what's not, and add any additional protection you may need.
Do I need full coverage car insurance?
While you are required by law in most states to have liability coverage (and no-fault medical coverage in some states), you are not required by any law to have full coverage.
However, if you owe money on your vehicle, your lender will require that you buy collision and comprehensive coverage to protect its investment. After you pay off the loan, buying comprehensive and collision is your choice.
Here are some rules of thumb on insuring any car:
- When the car is new or financed, you should have full coverage. Keep your deductible manageable.
- When the car is paid off, raise your deductible to match your available savings (higher deductibles help lower your premium).
- When your car is no longer worth enough to make paying for full coverage worthwhile, consider dropping comprehensive and collision.
Full coverage vs. liability-only insurance
Here’s how full coverage auto insurance is different from liability-only insurance.
| Compare by: | Liability-only coverage | Full coverage |
| Included coverage | Covers injuries and damage to the other driver and their car in an accident in which you are at fault | Covers liability for injuries and damage to others as well as damage to your car from accidents, theft, vandalism, and other non-collision incidents. |
| Requirement | Required in most states by law | Not required by law but required if you have a loan or lease |
| Coverage limits | Covers you up to the liability limits you choose | Covers you up to the liability limit you choose and covers your car for its actual cash value, after your deductible |
| Cost | State minimum liability-only coverage averages $502 a year | 100/300/100 liability with comprehensive and collision at $500 deductibles averages $1,895 a year. |
Learn more about full coverage car insurance rates for 2024.
Do I need full coverage insurance?
Whether you need full coverage auto insurance or not depends on various factors, including your financial situation, vehicle value, and risk tolerance.
- Vehicle cost - Full coverage insurance might be a good idea if you have a new or high-value car. This coverage helps protect your investment by covering damage to your vehicle, regardless of fault.
- Auto loan or lease requirements - If you financed your car, your lender may require you to carry full coverage insurance until the loan is paid off. This is to protect their interest in the vehicle.
- Driving habits and risks - Full coverage may be more beneficial if you live in an area with a high rate of accidents, theft, or natural disasters. Similarly, if you frequently drive in urban areas with high traffic, the risk of accidents may be higher.
- Age and condition of your car - As your car ages, its value typically decreases. At some point, the cost of full coverage may outweigh the potential benefit. You might consider switching back to liability-only coverage for an older car.
Before making a decision, it's recommended to talk to your insurance agent. They can help you understand the coverage options available, provide quotes, and assist in tailoring a policy that meets your specific needs.
Frequently asked questions: Full coverage car insurance
Is full coverage car insurance worth it?
As with any insurance, full coverage car insurance is worth it when you need to use it. If you can't afford to repair or replace you car out of pocket, full coverage is likely a worthwhile expense.
When should you drop full coverage on a car?
You can consider dropping a full coverage car insurance policy on your car when its value depreciates significantly, and you're comfortable covering potential repair or replacement costs out of pocket.
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