When shopping for auto insurance or discussing your policy, the term “full coverage” is often used. However, full coverage is not a specific type of auto insurance coverage. Rather, it is an inclusion of coverage for damage to your vehicle in addition to the coverage required for the damages and injuries caused to others if you are at fault in an accident.
Although each insurance professional may define full coverage auto insurance differently, the term generally includes liability insurance, comprehensive and collision coverage. When making decisions regarding full coverage, understanding exactly what it covers can help you make the most informed choice.
What does full coverage pay for?
A full coverage policy provides coverage beyond the minimum insurance requirements mandated by almost every state. The liability portion covers accident-related expenses for the other driver, including injuries and property damage. This includes medical treatments and bills plus damage to the driver’s vehicle when you are determined to be at fault for an accident.
The collision and comprehensive portions pay for repairs or replacement of your vehicle. Collision is when the damage occurs due to colliding with another vehicle or object. Comprehensive coverage applies when the damage is caused by something other than a collision. Theft, vandalism, weather-related damage, flooding or hitting an animal are all examples of what comprehensive coverage would cover.
What will full coverage not pay for?
Understanding what full coverage auto insurance does not cover is as important as knowing what it does cover. Damage from reckless activity such as off-roading or street racing are examples of activities excluding coverage. Ridesharing coverage is another example. Almost all insurance providers require a separate addition to your auto insurance policy for this.
Medical payments coverage and personal injury protection (PIP) specifically pay towards you and your passenger’s medical expenses and possibly lost wages, no matter who is at fault for the accident. Some states require these coversages, so these would automatically become part of a full coverage policy. For other states where it is not required, these could be a policy add-on.
Other add-on coverage options include:
- Rental car reimbursement
- Roadside assistance
- Uninsured motorist (required in some states)
- Underinsured motorist (required in some states)
- Gap insurance
When is full coverage required?
You may be questioning if you will purchase full coverage auto insurance, but there are cases where you are required and the answer is made for you. If you lease or finance your vehicle, the lender will usually require you to purchase a full coverage policy. Again, your required policy coverage could look different depending on the state you live in but would at least include liability, comprehensive and collision coverage.
Until you own your vehicle outright, the lender will want to keep their investment as protected as possible, which includes injuries and property damage to others, as well as your own vehicle. When purchasing a vehicle through a lease or loan process, you will be required to show proof of full coverage insurance to finalize the financing. You will also be required to show proof of insurance coverage to your lender throughout the life of the lease or loan. If you choose not to purchase the coverage after you have secured the loan, then you face the lender purchasing insurance for you — which can be much costlier — or possible repossession of the vehicle.
When is full coverage worth it?
When full coverage is an option for you, you need to understand if it is worth purchasing. Having full coverage could provide additional financial protection and benefits when faced with an accident or vehicle damage. In many cases, full coverage can be worth the added financial protection.
Full coverage is generally recommended by insurance professionals when you have a newer vehicle or a more expensive vehicle. If you are involved in an accident and there is damage to your vehicle, it could be quite expensive to pay out of pocket for your vehicle’s repairs. This could be the case if your vehicle strikes an animal or is vandalized too. Not carrying a full coverage policy means you might need significant savings to cover expenses for repairs or replacement of your vehicle.
How can you customize your policy?
It’s possible to update your existing policy and customize it to better suit your needs. Typically this is accomplished through a licensed insurance agent. Existing policyholders can easily make updates online in many cases.
There are several reasons why you may want to change your policy. For example, if you have an increased net worth, you may need to update your liability limits because of potential lawsuits from accidents. Perhaps you want to increase your coverage by adding comprehensive and collision to avoid paying higher out-of-pocket expenses when there is damage to your vehicle.
How much does a full coverage policy cost?
The average cost of car insurance in the U.S. is $1,674 annually for a full coverage policy. This average is based on 2021 data pulled from Quadrant Information Services. Shopping around and comparing insurance providers is a pivotal part of the insurance purchasing process and can make a difference with how much you pay for premiums. By receiving multiple quotes, you can see rates based on your personal information, which could mean you pay more or less than this national average.
In addition to choosing liability, comprehensive and collision with a full coverage policy, there are multiple other factors influencing how much your policy costs. Personal data, such as where you live, the vehicle you drive, the miles you drive per year, marital status, gender and credit score, can be rating factors insurers use to generate auto insurance quotes. Rates can also vary significantly from one insurance provider to another because each one assesses your risk as a driver in a different way. A licensed insurance agent can walk you through the various coverage options available and help you find the right coverage for you.
A Bankrate.com writer, Sara Coleman has three years of experience in writing about insurance on publications like The Simple Dollar, Reviews.com, Coverage.com and numerous other personal finance sites. She writes about insurance products such as auto, homeowners, renters and disability.