What Is Full Coverage Car Insurance?

A look at what full coverage is and whether you may need it.
Insurance agent talking to man

If you’re looking to buy car insurance, you’ll likely come across the term “full coverage”. This can be confusing to consumers. That’s because “full coverage” is used so much that many people think it’s a type of insurance. The reality is that full coverage is a term insurance companies use to show that you, your car, and your passengers are covered in the event of any kind of accident.

When your policy includes all three of the coverages listed below, you have what many insurers would call full coverage insurance:

  • Collision
  • Comprehensive
  • Liability

Many policies also include other optional coverages, such as:

  • Medical payments coverage (Medpay)
  • Uninsured or underinsured motorist coverage (UM and UIM)
  • Gap insurance

Note: the above coverage types aren’t part of full coverage, but you might want to add them anyway. We’ll talk more about each type later in the article.

Full coverage is a common term that shows up in the insurance industry, so it’s important to know the importance of each type of coverage. It’s also key to know if full coverage is something you should consider.

What Does Full Coverage Include?

Full coverage may not be an actual type of insurance, but it describes a policy with the most important coverages. The three major insurance types that full coverage includes are collision, comprehensive, and liability. Below are some quick explanations of each of these coverages:

Liability Insurance

Liability insurance pays for your out-of-pocket expenses if you’re at fault in an accident. This can ease lots of worry after an accident and save you lots of money in the long run. Your liability coverage doesn’t come into play if an accident isn’t your fault.

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 the other people in the accident.

Most states require a minimum amount of liability insurance to drive. Be sure to check with your agent to find out if you need it.

Collision Insurance

Collision insurance will help pay for your expenses if your car hits something. This even protects you if your car gets hit while it’s sitting in a parking lot. It also covers out-of-pocket expenses when your car hits another non-car object such as a pole, tree, sign, or even your own house.

An accident doesn’t need to involve other objects for collision coverage to protect it. If you run over a pothole or spin out due to snow or ice and cause damage, collision can come to the rescue.

Comprehensive Insurance

Comprehensive coverage takes care of your expenses if you fall victim to a random event that damages your car. Many insurance providers refer to these events as an “act of God” because they are random and destructive. Comprehensive covers damage from events like:

Comprehensive is usually a good idea to buy if you live in an area where you’re at risk from any “acts of God.” This could mean places like hurricane hotspots or rural areas with lots of deer running around on the roads.

What Full Coverage Doesn’t Include

While full coverage can protect you from a lot of potential risks, you’re not bulletproof when you hit the road. There are other types of insurance that you might want to add to your policy to ensure better financial security. Here are some of the other common types of auto insurance that you may want to add:

Medical Payments Coverage (MedPay)

MedPay is a type of car insurance that pays for medical bills and funeral expenses regardless of who is at fault. While MedPay is normally part of a driver’s car insurance policy, it can also protect pedestrians if they’re hit by a vehicle.

There are plenty of benefits to carrying MedPay on your policy. If you have it on your policy, you will receive protection from:

  • 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. Maine and New Hampshire require drivers to carry a minimum amount of coverage on their policy. Even though it may be optional, you might still consider buying it because of the protection that it offers.

Gap Insurance

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 you total your car or if it gets stolen before it’s paid off. Accidents and natural disasters like hurricanes and flooding are the types of events that can total your car.

This coverage is useful for drivers who just bought a new car or who only placed a small down payment. Your car lender or lessor may also include it in your contract when you finance your car.

Uninsured (UM) and Underinsured Motorist (UIM) Coverage

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 coverage. They also cover an accident where the other driver doesn’t have enough insurance to pay for the expenses.

According to the Insurance Information Institute (III), about one out of every eight drivers don’t have insurance. Drivers who don’t have insurance are either breaking the law or 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 so that you’re better protected. Certain states require UM and UIM to drive. Be sure to check in with your insurance provider and state laws to know if you need it.

Even if you’re considering buying full coverage, you also have the option to any of the above types to your policy. If any of the above options are something you want to add, you should check with your insurance provider about adding it to your plan.

Who Needs Full Coverage?

Most states require a minimum amount of liability insurance. Because of this, full coverage is optional and is something you can decide to add for yourself depending on how much you want to spend or the type of risk that you’re willing to take on.

Here are some scenarios where you may need full coverage:

You’re Financing or Leasing a Vehicle

If you’re planning to finance or lease a car, you need collision and comprehensive insurance. This is also in addition to the other types of insurance that your state requires, such as basic liability insurance. Because of this, you technically need full coverage when you get a car with a lender’s help.

Also note that your state may require more than just liability coverage to drive. Other types of insurance like UM, UIM, and MedPay are mandatory in certain states.

You Can’t Afford to Pay For Out of Pocket Expenses

This reason is why people buy car insurance. Accidents often result in medical expenses and property damage that can clean out your wallet if paid for out-of-pocket. Random events such as natural disasters and theft can happen at any moment and cost you a lot. If you’re not ultra-wealthy or in the right place to handle the often-large expenses from an accident, then full coverage would help put your mind at ease.

You Live in a Risky Area

Full coverage might be something to think about if you live in an area that puts you at a higher risk of getting into an accident or having a disaster strike your car. For instance, you may live in a state that has a high risk for accidents. According to the Insurance Institute for Highway Safety (IIHS), the three states with the most fatal crashes per year are:

Living in a high-risk area for car accidents is a good reason to add collision insurance to your policy.

Comprehensive insurance might be a good idea if you live in an area that’s known for tornadoes and hurricanes. The same goes for if you live in a city that has a high rate of car thefts. A 2020 study by the III displays the following cities as being the top five in terms of car theft rate in the country:

RankCityCar Thefts
1Bakersfield, CA8,161
2Yuba City, CA1,279
3Denver-Aurora-Lakewood, CO21,112
4Odessa, TX1,114
5San Francisco-Oakland-Berkeley30,774
Note: this data comes from the rate of vehicles stolen per 100,000 people.

If you live in an area where you’re at extra risk for getting into an accident or having a random “act of God” affect you, then full coverage insurance is something you should consider to save money and stress.

How Much is Full Coverage?

Every auto insurance provider offers full coverage, but prices may vary depending on who you buy from. The reality is insurance prices aren’t always consistent across companies and can also depend on rate factors that affect what price you receive. These factors include:

These are only some of the factors that insurance companies consider when they calculate your rates. The best way to get a good deal on your insurance is to take inventory of your choices and compare prices between each insurance company.

Frequently Asked Questions

Q: Is full coverage worth it?

A: For some people it is and for others, it may not be. Ultimately, it depends on the risk that you face or are willing to take on when you drive. If you aren’t able to handle the out-of-pocket costs from an accident or live in a high-risk area for crashes or natural disasters, full coverage is worth it. This is because it protects you from all of those things to ensure that an accident won’t financially cripple you.

Full coverage is a must-have if you’re financing or leasing a car because you need collision and comprehensive insurance to do so.

Q: What isn’t included in full coverage?

A: Full coverage only includes the three major insurance types: collision, comprehensive, and liability. Any other types of insurance such as gap, MedPay, UM and UIM are separate from full coverage.

Q: When should I drop full coverage?

A: Full coverage is good to have, but it isn’t for everyone. You might think about dropping full coverage on your car if:

  • Your car is worth less than the price of your full coverage rates
  • You don’t think that the risk is very high, or you believe you’re a very safe driver
  • You don’t drive very far or hardly at all
  • The car you drive has extremely high miles (At this point, it’s not worth too much)

Q: What’s the difference between liability insurance and full coverage?

A: There are many differences between liability and full coverage. The biggest one is that full coverage is not a type of insurance. Rather, it means that you have the three main types of insurance on your policy. This includes collision, comprehensive, and liability insurance.

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