When shopping for a new auto policy, you may stumble upon the term full coverage. It confuses consumers because the phrase appears so much that many people believe it’s an actual product. In reality, it’s simply a term used a policy includes, at a minimum, the three pillars of auto insurance: liability, collision, and comprehensive.
In this article, we’ll break down the three types of car insurance most people equate with full coverage policies. We’ll also discuss other important policy add-ons and optional coverages. Then, we take a look at situations where you must be fully covered and a few where it’s a good idea but not required. Finally, we provide average full-coverage costs in every state.
Full-Coverage Policy Basics
A full-coverage policy includes three key auto insurance products: collision, comprehensive, and liability. Below are some quick explanations of each:
Liability
Liability insurance pays for out-of-pocket expenses if you’re at fault in an accident. It can reduce worry after an accident and save you lots of money in the long run. Not only does it protect you, but it also ensures that the crash victim(s) don’t have to pay for anything.
Here’s a list of what liability covers if you’re in an accident:
- Damage to the other person’s car
- Property damage to other objects e.g., signs, light posts, buildings, etc.
- Bodily injury to other people in the accident
Most states require a minimum amount of liability to drive. So, what we’re really talking about are the two additional products necessary to be fully covered: collision and comprehensive.
Collision
Collision insurance pays for repair costs if your car hits an object (or vice versa). This coverage also protects you if something damages your car while it’s parked. In addition, your insurer will renumerate you for out-of-pocket expenses when your vehicle hits another non-car object like a pole, tree, sign, or even your own house.
An accident doesn’t need to involve other objects for this coverage to protect it. So, if you run over a pothole or spin out due to snow or ice and cause damage, collision insurance can come to the rescue.
Comprehensive
Comprehensive insurance pays for vehicle repairs if you fall victim to a random event that damages your car. Many providers refer to these events as an “act of God” because they come out of nowhere and are destructive. With this coverage added to your policy, you’ll get protection from disasters like:
- Natural disasters e.g., hurricanes, wildfires, tornadoes, hailstorms, and floods
- Vandalism
- Theft
- A collision with an animal
Comprehensive makes smart economic sense if you live in an area where you’re at risk from covered acts of God. It could mean places like hurricane hotspots, tornado alley, or rural areas with lots of deer running around on the roads.
Other Coverages Your State May Require
While these three primary coverages can protect you from many potential risks, you’re not bulletproof when you hit the road. To add extra protection, many providers offer additional types of insurance to ensure better financial security, including:
Medical Payments (MedPay)
Medical Payments (MedPay) pays for medical bills and funeral expenses regardless of who’s at fault. This coverage also extends to pedestrians injured in a crash. There are plenty of benefits to carrying MedPay on your policy, including:
- Ambulance and EMT fees
- Doctor and clinic visits
- Hospital visits
- Surgeries
- Medical exams e.g., x-rays and other tests
- Nursing
- Prosthetics
- Health insurance co-pays and deductibles
- Funeral expenses
MedPay is optional in most states, but Maine and New Hampshire require drivers to carry a minimum amount on their policy. Even though it may be optional, give this additional coverage some thought because of the protection that it offers.
Guaranteed Asset Protection (Gap)
Gap insurance pays the difference between what you owe on a car and its actual cash value (ACV). It covers what you still owe on your loan if your car gets totaled or stolen before you make the final payment. Gap is for drivers who just bought a new car or only placed a small down payment. Your car lender or lessor may include it in your contract when you finance it.
Uninsured and Underinsured Motorist (UM and UIM)
UM and UIM are two very similar coverages that drivers have the option of adding to their policy. They pay for any damages or injuries you or your car sustain if you’re hit by a driver who doesn’t have any liability protection. In addition, they cover an accident where the other driver doesn’t have enough insurance to pay for the expenses.
If you’re the victim of a hit-and-run, UM will cover it. Since the at-fault driver is nowhere to be found, insurers consider them to be uninsured.
According to the Insurance Information Institute (IIIhttps://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists), about one out of every eight drivers aren’t covered. These drivers are breaking the law and putting others at risk of paying out-of-pocket expenses. This risk is why UM and UIM can be a good idea to add to your policy. Certain states also require UM and UIM to drive. Check in with your provider and state laws to know if you need it.
Situations Where MedPay Makes Sense
Most states require a minimum amount of liability. So, collision and comprehensive are optional and something you can decide to add for yourself. Ultimately, it depends on how much you want to spend or how much risk you’re willing to take on.
Here are some scenarios where being fully covered with collision and comprehensive are a necessity:
You Finance or Lease a Vehicle
If you’re financing or leasing a car, your lender will require collision and comprehensive. These are in addition to whatever your state requires, such as liability. Because of this, you technically need full coverage when you finance a car.
Also, note that your state may require more than just liability to drive. UM, UIM, and MedPay are mandatory in some states.
You Can’t Afford to Pay For Out of Pocket Expenses
Accidents often result in expensive medical bills and property damages. Even a minor crash can empty your wallet if you have to pay for expenses out of pocket. Random events such as natural disasters and theft can happen at any moment. Being fully covered is a smart choice when you don’t have enough money to handle the often-large expenses of an accident.
You Live in a Risky Area
You may want to add collision insurance to your policy if you live in an area that puts you at risk for accidents. For instance, your state might have a higher incidence of accidents than the national average. According to the Insurance Institute for Highway Safety (IIHS), the three US states that experience the highest number of fatal crashes per year are:
- California – 3,316
- Texas – 3,294
- Florida – 2,950
Comprehensive might also be a good idea if you live in an area that’s notorious for tornadoes and hurricanes. The same goes if you live in a city that has a high rate of car thefts. A 2020 study by the III found that these cities had the highest auto theft rates in the country:
| Rank | City | Car Thefts |
|---|---|---|
| 1 | Bakersfield, CA | 8,161 |
| 2 | Yuba City, CA | 1,279 |
| 3 | Denver-Aurora-Lakewood, CO | 21,112 |
| 4 | Odessa, TX | 1,114 |
| 5 | San Francisco-Oakland-Berkeley | 30,774 |
How Much It Costs
Every auto insurance provider offers the three products that comprise a full-coverage policy. However, premium costs vary based on which company carries your policy, your personal details, and a variety of rate factors, including:
These are only some of the factors that companies consider when they calculate your rates. The best way to get a good deal on your premium is to take inventory of your choices and compare prices between each provider.
US Average Full-Coverage Costs
The table below shows average rates for policies that include liability, collision, and comprehensive in the US from 2012 to 2019. This is the most recent period of pricing data we can access from the III.
| Year | US Average |
|---|---|
| 2012 | $814.99 |
| 2013 | $841.23 |
| 2014 | $866.31 |
| 2015 | $889.01 |
| 2016 | $935.80 |
| 2017 | $944.36 |
| 2018 | $1,056.55 |
| 2019 | $1,070.47 |
Below is a visual representation of the above data:
Average Rates by State
Rates tend to vary based on where you live. Many details about your area can impact average prices, including:
- Number of claims
- Car repair costs
- Health care costs
- Weather severity
The next table provides average rates to fully cover vehicles in all 50 states and the District of Columbia in 2019. The data is from the III and was originally collected by the National Association of Insurance Commissioners (NAIC). The national average we compared each state to was $1,070.47 in 2019.
| State | Average Cost | US AVG Difference |
|---|---|---|
| Alabama | $932.14 | -14.8% |
| Alaska | $991.09 | -8% |
| Arizona | $1,063.93 | -0.6% |
| Arkansas | $897.92 | -19.2% |
| California | $1,051.79 | -1.8% |
| Colorado | $1,174.87 | +8.9% |
| Connecticut | $1,237.55 | +13.5% |
| District of Columbia | $1,440.58 | +25.7% |
| Delaware | $1,289.93 | +17% |
| Florida | $1,414.17 | +24.3% |
| Georgia | $1,259.49 | +15% |
| Hawaii | $839.87 | -27.4% |
| Idaho | $738.10 | -45% |
| Illinois | $939.64 | -13.9% |
| Indiana | $777.05 | -37.8% |
| Iowa | $714.86 | -49.7% |
| Kansas | $818.99 | -30.7% |
| Kentucky | $935.61 | -14.4% |
| Louisiana | $1,557.22 | +31.2% |
| Maine | $696.37 | -53.7% |
| Maryland | $1,236.61 | +13.4% |
| Massachusetts | $1,182.69 | +9.5% |
| Michigan | $1,495.94 | +28.4% |
| Minnesota | $892.17 | -19.9% |
| Mississippi | $975.58 | -9.7% |
| Missouri | $929.91 | -15.1% |
| Montana | $834.86 | -28.2% |
| Nebraska | $807.30 | -32.5% |
| Nevada | $1,292.52 | +17.2% |
| New Hampshire | $864.35 | -23.8% |
| New Jersey | $1,395.53 | +23.3% |
| New Mexico | $932.67 | -14.8% |
| New York | $1,445.30 | +25.9% |
| North Carolina | $741.70 | -44.3% |
| North Dakota | $703.73 | -52.1% |
| Ohio | $802.72 | -33.3% |
| Oklahoma | $908.95 | -17.7% |
| Oregon | $990.00 | -8.1% |
| Pennsylvania | $992.33 | -7.9% |
| Rhode Island | $1,382.64 | +22.5% |
| South Carolina | $1,114.90 | +3.9% |
| South Dakota | $745.33 | -43.6% |
| Tennessee | $863.39 | -23.9% |
| Texas | $1,143.85 | +6.4% |
| Utah | $954.14 | -12.2% |
| Vermont | $785.37 | -36.3% |
| Virginia | $861.18 | -24.3% |
| Washington | $1,066.84 | -0.3% |
| West Virginia | $946.03 | -13.1% |
| Wisconsin | $767.42 | -39.5% |
| Wyoming | $776.22 | -37.9% |
Frequently Asked Questions
Is full-coverage worth it?
Most people seem to think so. In fact, as many as 79% of US drivers carry all three of the primary coverages. But, for others, it might not be. Ultimately, it depends on the risk you’re willing to take on. It’s probably worth it if you aren’t able to handle the out-of-pocket expense from an accident or live in a high-risk area for crashes or natural disasters.
Lenders may also require collision and comprehensive, in addition to standard liability, when you finance a car. Technically, it’s their car until you make the final payment. So, they’re just protecting their investment.
When should I drop collision or comprehensive?
Without a doubt, more coverage is usually better. However, it doesn’t always make sense. You might think about dropping collision and comprehensive if:
- Your car is worth less than the price of your policy
- Your accident risk isn’t very high, or you believe you’re a very safe driver
- You don’t drive your car very far or hardly at all
- The car you drive has extremely high miles (at this point, it’s not worth too much)
What’s the difference between liability and full-coverage?
There are many differences between liability and full-coverage. The biggest one is that the latter isn’t a type of insurance. It means you have at least the three main types on your policy. These include collision, comprehensive, and liability.
