There is no one-size-fits-all car insurance policy. Despite its name, full coverage car insurance doesn’t cover every type of accident or incident. In fact, full coverage car insurance is a bit of a misnomer, as there is no single full coverage car insurance policy you can buy.
If you see anyone advertising full coverage car insurance, it's likely that the coverage is a package deal made up of several comprehensive, collision, and liability policies that you can tailor to your needs. It’s important to know the differences in these policies so you can choose the right types and amount of coverage for you.
Types of Car Insurance
There are three basic types of car insurance policies that, when combined, offer you “full coverage.” That is, they cover you for almost every scenario you’re likely to encounter with your car. Those three types of policies are collision, comprehensive, and liability.
All states require at least some level of state-mandated car insurance coverage. The types of coverage and the minimum amount each policy covers vary by state. These laws are mainly designed to cover those you injure and property you damage if you cause an accident or are considered at-fault in a collision. You can learn more by reading our guide on how car insurance works.
If you're involved in an accident and your vehicle must be repaired or replaced, collision insurance covers that, minus your deductible, up to the dollar amount as spelled out by your insurance policy.
With collision coverage, you don’t get to dictate if your car is repaired or replaced. You may prefer to have your car repaired instead of replaced, but your auto insurance company may decide that it costs less for them to cut a check for the value of the vehicle. Policyholders can argue with the insurance company for repairs, but they do not have the final say.
The cost of collision insurance varies greatly. You will need to decide how much cash you want to be responsible for forking over in the event of a claim. The amount you're responsible for paying is your deductible. If you choose a $1,000 limit, you are responsible for all costs under $1,000. If you're in an accident that causes $12,000 worth of damage, you will pay $1,000 and your insurance company will pay $11,000.
You will always pay your deductible before the insurance company ponies up a cent. You'll frequently hear this referred to as, “the first $1,000” or “the first $250.” A policy with a high deductible generally costs less per month than a policy with a low deductible because you are assuming more risk. That said, if you have an accident and you have a high deductible, you’ll need to have cash on hand to pay it, which means that lower monthly payment may not be worth it.
You can reduce your collision insurance costs by driving an inexpensive car or one that is cheap to repair. Because that lowers the amount the insurance company would need to pay, it lowers the price of your collision policy.
A clean driving record will also help keep your collision insurance costs down. Your insurance company will see that you’re less likely to have an accident than a driver with lots of accidents or speeding tickets on their record. With a lower accident risk, and a smaller chance that they’ll have to pay for repeated repairs to your car, your insurance company will charge you less for collision coverage. See more about collision car insurance and car insurance discounts.
Having a comprehensive coverage policy ensures that your vehicle is covered in the event of an incident unrelated to a collision. This type of policy covers such things as hail damage, vandalism, and theft.
If you live in an area with frequent hurricanes or flooding you’ll want to check with your insurance provider to see if your policy covers these types of natural disasters. Some insurance companies make exceptions for coverage in certain designated disaster zones. For them, the risk of paying out in the event of a disaster is too high. Consequently, when there are fewer providers for a market like that, the cost of coverage can be higher than it traditionally would because there's less competition for business.
Like collision insurance, you can lower your cost for comprehensive insurance by owning a car that’s cheap to repair or replace. You can also get a better rate by keeping your car in a garage, as opposed to parking it on the street. See more about comprehensive car insurance and car insurance discounts.
If you cause an accident and damage another person's property, liability car insurance will cover the cost to repair or replace it. For example, if you’re texting and driving and you drive into someone’s fence, liability insurance will pay for repairing or replacing the fence. A liability policy does not cover you, your property, or other persons that may be in your vehicle at the time of the collision. Like collision and comprehensive car insurance, liability car insurance comes with a deductible and limits on how much your car insurance company will pay out.
Liability insurance can be subdivided into two categories: bodily injury liability and property damage liability. If you cause an accident that results in physical injuries to someone outside your vehicle (another driver, a pedestrian, or a bystander), bodily injury liability insurance covers costs related to those injuries. If you rear-end another vehicle, and the driver of that vehicle has to go to the hospital, this type of insurance covers the cost of that treatment, minus your deductible, up to the limit predetermined by your policy. This type of insurance does not cover injuries to you as the driver or your passengers.
Property damage liability covers the costs of repairing or replacing property that's damaged as the result of a collision that's your fault. If you drive into a fence, property damage liability insurance would pay to repair or replace the fence, minus the cost of your deductible, up to the limit as stated in your insurance policy. This type of policy does not cover damage to your vehicle or property.
Liability policies are usually purchased with three different dollar amounts of coverage listed. For example, a policy that lists 100/200/50 liability coverage covers up to $100,000 for injuries to a person, $200,000 for injuries per accident, and $50,000 in property damage per accident.
Sometimes, policies list just one number, the total amount, which is broken down in the fine print of your contract. Be sure to read the fine print before you sign to ensure you’re getting the type of coverage the makes the best sense for you.
When determining how much liability car insurance you need, you’ll want to consider your assets. If you're in an accident that causes more damage than you have insurance coverage for, you’re on the hook for the rest of the amount, and you can be forced to do things like sell your house or liquidate your retirement accounts to pay for the difference. More coverage will cost more, but it beats losing your home or savings. Read our guide on how much car insurance you need to learn more.
Twelve states have no-fault automotive insurance laws. Drivers and vehicle owners in these states have more protection from lawsuits than drivers who have policies originating in at-fault states. If you reside in a no-fault state, you may want to consider purchasing a Personal Injury Protection policy. A PIP policy covers your injuries from an accident regardless of who is at fault. In a no-fault car accident state, it will be difficult to sue or have another driver’s liability insurance cover your injuries, even if they caused the accident, because under the laws of no-fault states, no one is responsible for car accidents. Also, if you’re hurt in a hit-and-run or injured by an uninsured motorist, a PIP policy will not only cover your medical costs but other costs as well, which may include lost wages or transportation to medical appointments. When you purchase PIP insurance, there is a dollar limit to its coverage, which means it's possible to max out the policy. Check with your insurer to see if this type of coverage makes sense for you.
How to Get Full Coverage Car Insurance
Full coverage car insurance can be a package deal made by an insurer consisting of liability, collision, and comprehensive coverage. Normal wear and tear of an automobile – including mechanical breakdowns, tire damage, and electronics malfunctions – is not covered by full coverage car insurance. Full coverage car insurance doesn't cover items stolen in a break-in (those are covered by renters and homeowners insurance policies), damage related to freezing, or custom parts and equipment.
Before you settle on a policy, investigate how your personal health insurance coverage plays into appropriate levels of coverage. If you have a low insurance deductible, you may not want to pay for large amounts of personal injury related policies.
Supplemental Policy Types
Despite the large amount of security a full coverage car insurance policy gives you, you may still need to add additional types of insurance. Personal injury protection, medical expense, uninsured and underinsured motorist, lender, gap, roadside assistance, umbrella, forgiveness, transportation expense, original equipment, custom equipment, and glass or windshield coverage can be purchased in addition to your full coverage policy. Some of those policies are required by law to be part of your coverage.
Medical expense coverage pays for exactly what it sounds like it does – medical expenses related to an accident. Whether or not you’re at fault, this policy can be used to pay for the care of you and your passengers in the event of a collision. Some states require this coverage.
Uninsured and underinsured motorist coverage is another type of policy many states require. If you are the victim of a hit-and-run or collide with someone who does not have insurance or has insurance that falls below the state’s minimum mandated coverage amount, uninsured and underinsured motorist coverage can help with the costs associated with the incident.
Ideally, full coverage insurance means that you have assumed an appropriate amount of risk and are covered enough to protect all your assets via various policies. A good insurance policy will cover all your assets at a monthly, quarterly, bi-annual, or annual payment rate that fits your budget. Your deductibles should also be set at amounts you could come up with in the event of an accident.
When you borrow money to purchase a vehicle, the lender may require that you buy a certain level of auto insurance, including comprehensive and collision insurance. You'll likely need to keep that level for the length of your loan. These terms are spelled out in your lending agreement and available for you to see before you sign on the line for your new vehicle. This may include policies that are not traditionally part of full coverage insurance, like gap insurance.
Gap insurance covers the difference between the value of a vehicle and the amount you owe on a loan for it. This type of coverage protects you, ensuring that you won’t owe the balance of the loan if the vehicle is totaled in an accident. You can learn more in our gap insurance guide.
With so many car companies offering their own roadside assistance packages, roadside assistance coverage may not be necessary. Often, you can subscribe to a roadside assistance program, such as AAA, for much less money than an insurance policy would cost. Still, most insurers offer this type of coverage, and it can be worth getting if you don’t have roadside assistance from another source.
Umbrella insurance is a good thing to have if your assets total more than $1 million. It is a supplemental policy that goes into effect after other liability policies have been exhausted. It can be helpful if you're involved in a lawsuit as the result of an accident.
As the name suggests, accident forgiveness policies allow you to be forgiven by your insurance company if you have a collision. Policy rates frequently rise after this type of incident, but with forgiveness coverage, you won’t see your bill rise after your first accident. Instead of offering this type of insurance, many companies, like Geico and Allstate, instead offer a rebate or a discount on your bill if you haven’t had an accident in some time.
Transportation expense coverage takes care of costs related to renting a car if your vehicle needs repairs after an accident. This type of policy can save you money in the long run because severe damage to a car can take weeks to fix. If you only own one vehicle and don’t live in an area with good public transportation, this type of coverage may be something to consider.
An original equipment policy requires that a repair shop uses original manufacturer constructed parts to repair your vehicle if it's damaged in an accident. These parts are often more expensive than aftermarket parts. Paying for this policy each month guarantees that the parts used are the parts designed specifically for your vehicle. Not having genuine manufacturer parts may affect your car’s resale value.
If you have customized your vehicle, you may want to consider a custom equipment policy. Traditional policies often don't cover these costly aftermarket upgrades.
If a break-in, an encounter with an animal, or flying debris from the road damages the glass on your car, glass coverage will replace the broken glass and get you quickly on your way. Glass claims are the most common type of car insurance claims, so this type of coverage is definitely worth it. Often, glass repair shops will help you file a claim.
Why You Need Full Coverage Car Insurance
There are three main reasons to get full coverage car insurance: legal compliance, lender compliance, and financial risk.
Vehicle owners need to comply with the laws of the state where they reside. Local insurance agents are likely familiar with the state’s regulations, but it's important to do your own due diligence.
Each state has its own set of insurance requirements regarding which types of policies vehicle owners must have and how high the limits on those policies must be. Most insurance companies tailor full coverage policies to specific states and provide coverage according to local regulations.
When you borrow money to buy a car, the lending institution will often require you to show proof of a certain level of insurance to safeguard their risk. Letting your insurance lapse or purchasing a policy that doesn’t fulfill this requirement can be cause for the bank to call in the remaining balance of your loan because you have violated the terms of your agreement.
If you are purchasing your vehicle from a dealership and have used the dealership to help secure a loan, they will often require proof of insurance before handing you the keys to the car.
Properly covering yourself with insurance policies helps ensure that a single car accident won’t ruin you financially. If you don't have proper coverage and you become liable for medical expenses and damages related to an automobile accident, you could quickly go bankrupt. Insulating yourself from financial ruin is one of the smartest things you can do to protect your family.
How Much Will Full Coverage Insurance Cost Me?
Several factors go into determining what you pay for car insurance. In addition to the type and amount of coverage, car insurance companies consider your credit score, age, sex, and driving record. If you're considered too much of a risk, some insurance companies may not allow you to purchase a policy.
Where you live also affects the cost of car insurance. People living in apartments with mass parking lots or residents who only have street parking present an increased risk of damage to their vehicles, which could result in an insurance payout. Also, states with no ceiling on medical claim payouts, such has Michigan, have higher rates because insurance companies need to have more cash in reserve for settlements and claims.
States where people frequently drive without car insurance, places where there is hazardous weather, cities with a high cost of living, and no-fault states also have high car insurance rates.
Despite vast differences in insurance prices throughout the U.S., overall, pricing is relatively stable, without sharp increases and decreases as the markets change over time, and only slight increases year over year. However, natural disasters can cause insurance rates to quickly skyrocket in a certain region as companies try to regain their losses and risk assessors reevaluate their projections.
When Should I Get Rid of Full Coverage Car Insurance?
Numerous industry experts recommend dropping most comprehensive and collision insurance when a vehicle nears the end of its lifespan. This is because it is likely more expensive to insure the vehicle each year than it would be to repair or replace it. Still, you will want to adhere to state regulations and protect your assets with good liability coverage.
Based on these recommendations, if your car is getting up there in years, you’ll want to drop your full coverage auto insurance policy at the end of its term and instead go with coverage more tailored to your needs.
Who Sells Full Coverage Car Insurance?
Nearly all auto insurance companies – including Geico, State Farm, Allstate, and Progressive – sell full coverage policies or the individual types of policies that, taken together, provide you with full coverage. You’ll want to make sure that all coverage types are available in your area. Also, some companies are willing to bundle your auto, homeowners, renters, or other policies together, saving you money and helping them retain a customer.