What full coverage insurance includes
Full coverage auto insurance is a policy that includes not only mandatory state coverages, such as liability insurance, but also comprehensive and collision coverage. It may also include required coverages mandated by law and optional coverages you choose to add.
A full coverage policy does what liability-only doesn't: covers damage to your car no matter who is at fault.
There's no official definition of full coverage car insurance, because laws and coverage options vary by state. If you were to buy every coverage available, your full coverage policy might look like this:
- 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
What does full coverage car insurance cover?
Full coverage insurance covers at-fault accidents for injuries and damage to others (liability insurance) and your vehicle, either in an accident (collision coverage) or a non-collision event (comprehensive coverage). It also covers your injuries if you carry personal injury protection (PIP), which is 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 pays 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, even with full coverage insurance
Full coverage car insurance doesn’t cover everything. Exclusions include damage caused by any illegal activity or activity prohibited by your policy, like racing, wear and tear and mechanical breakdown.
Check your policy for these and other exclusions:
- 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: 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.
Is full coverage car insurance required?
You are required to have full coverage if you have a loan or lease on your vehicle; it's part of the agreement.
While you are required by law in most states to have liability coverage (and various other coverage depending on the state), no law requires full coverage.
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.
Do I need full coverage insurance?
You need full coverage insurance if you are required by a loan or lease to carry it. Beyond that, you should carry full coverage if you have a high-value vehicle that you couldn't afford to repair or replace out of pocket, especially if you live in a high-risk area or drive a lot.
Consider these four factors when choosing insurance coverage:
- 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.
FAQ: Full coverage car insurance
Is full coverage car insurance worth it?
Full coverage car insurance is worth it if you can't afford to repair or replace your car out of pocket after an at-fault accident, theft or other serious damage. It's also required if you have a loan or lease. Full coverage may not be worth it for an older car or if you don't drive much.
When should you drop full coverage on a car?
A common rule of thumb is to drop full coverage insurance when your car's actual cash value falls below your annual comprehensive and collision premiums times 10. So, if you pay $400 a year for comprehensive and collision, you can drop the coverages when your car's value hits $4,000 or lower.
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