When you’re deciding on a car insurance policy, you may hear the term “full coverage” thrown around– whether from your dealer, your financing company, or in casual conversation. But what’s really included in full coverage car insurance? Understanding what goes into this type of policy is important in researching what you need.
What Is “Full Coverage” Car Insurance?
Despite its ubiquity, full coverage insurance isn’t an official type of insurance– it’s an informal term used by drivers and insurance professionals to describe a general type of policy. Full coverage insurance typically includes the required coverage in your state, as well as comprehensive and collision insurance.
Depending on where you live, your insurance requirements may vary. Here are the main types of insurance that “full coverage” may entail.
Liability coverage
Liability coverage is required in almost every state, aside from New Hampshire. It protects you financially if you are at fault for an accident and cause injury to others or damage to their property.
- Bodily Injury Liability: Pays for medical expenses, lost wages, and pain and suffering for people injured in an accident you cause.
- Property Damage Liability: Covers damage to another person’s vehicle or property (like a fence, building, or lamppost) that you cause.
Uninsured/Underinsured Motorist (UM/UIM) coverage
UM/UIM coverage protects you and your passengers in case of an incident with an uninsured driver. Uninsured Motorist (UM) pays for your medical expenses and, in some cases, property damage, if you’re hit by a driver who doesn’t have any insurance. Underinsured Motorist (UIM) kicks in when an at-fault driver has some insurance, but not enough to cover all your damages, helping to pay for the remaining costs.
Personal Injury Protection (PIP) / Medical Payments (MedPay)
Typically mandatory in no-fault states, personal injury protection (PIP) pays for medical expenses and lost wages for you and your passengers, regardless of who caused the accident. In “at-fault” states, MedPay offers similar, though often less extensive, medical coverage.
Comprehensive coverage
This protects your vehicle from damages that aren’t caused by a collision. This includes a wide array of perils such as theft, vandalism, fire, and natural disasters (like hail or floods), as well as damage from hitting an animal.
Collision coverage
This helps pay for the repair or replacement of your own car if it’s damaged in a collision with another vehicle or object (like a tree, guardrail, or even a pothole), regardless of who was at fault. If you have a car loan or lease, your lender will almost certainly require you to carry collision coverage.
Other Types of Coverage to Consider
Although a typical full coverage policy protects against the most common and expensive risks associated with driving, it still leaves some gaps. Depending on your needs, you might want to consider securing additional options.
- Rental Car Reimbursement: Pays for a rental car while your vehicle is being repaired after a covered claim.
- Roadside Assistance: Helps with services like towing, jump-starts, flat tire changes, or lockouts.
- Gap Insurance: If you have a car loan and your vehicle is totaled, gap insurance covers the difference between what you owe on your loan and the car’s actual cash value.
Do You Need “Full Coverage” Car Insurance?
If you’re leasing or still paying off your car, “full coverage” car insurance is typically not your decision– it’s mandatory. Regardless, getting comprehensive and collision insurance on top of your mandatory coverage offers crucial peace of mind and protection from unexpected incidents.
Even if you consider yourself a cautious driver, accidents can still happen– often through no fault of your own. For instance, imagine you get rear ended by another car at a traffic stop. Regardless of your insurance, the at-fault driver is responsible for paying for your damages– either through their liability coverage or out of pocket. However, if you have collision coverage, your insurance will take on the task of pursuing the driver or their insurance for damages.
Beyond specific scenarios, getting a full coverage policy can ensure financial security and reduced stress. In the unfortunate event of an accident, “full coverage” means you won’t be solely responsible for potentially crippling repair or replacement costs for your own vehicle. This allows you to focus on getting back on track after the fact rather than worrying about unexpected financial burdens.
At the same time, every driver is different, and not everyone needs a robust insurance policy. If you drive an older vehicle with a low book value, full coverage may not be necessary. If you can afford to pay for repairs or replacement yourself, forgoing comprehensive and collision coverage may be recommended to cut down recurring costs and build up an emergency fund.
Finding the Right Coverage for Your Needs
While “full coverage” doesn’t mean coverage for absolutely everything, it provides a robust and essential layer of protection for most drivers. When you’re shopping for car insurance, don’t just ask for “full coverage.” Instead, choose a selection of coverage that best meets your personal needs, budget, and driving habits.
Looking to shop for car insurance? Get started with our free comparison tool.
