What does full coverage car insurance mean?

The idea of "full coverage" auto insurance where you have total protection for your car or truck would be great. But what does "full coverage" mean for car insurance? Also, why can this term be misleading when selecting the right coverage for your vehicle?

To start, there's no standard definition of "full coverage" for car insurance. Car insurance isn't a one-size-fits-all purchase and a car insurance policy should be customized to fit your needs. A few things to consider are how much coverage you need to protect your property and assets. Based on your situation, your version of full coverage insurance may differ from someone else's.

For help finding what works best for you, check out our Coverage Calculator.

What coverages make up an auto insurance policy?

Auto insurance policies have state-required coverages which include limits you're legally required to have. Then there are optional coverages and coverage limits. The coverages and limits of coverage vary by state. Want to know more about your state? Check out the state information pages.

Common Car Insurance Coverages

Some car insurance coverages are required by your state. Although you must have the minimum limits; you can choose higher limits so your policy will fit your needs.

Liability Coverages

Most states require you buy liability coverage. It includes coverage for bodily injury and property damage. These coverages help provide protection if you're at fault in an accident and cause injury or damage to another person or their property.

Uninsured/Underinsured Motorist Coverage

Uninsured motorist coverage helps protect you if you're involved in an accident with someone who doesn't have liability insurance. Underinsured motorist coverage helps protect you if you're involved in an accident with someone who doesn't have enough insurance to pay for your damages. These coverages may help cover your injuries or property damage.

These coverage requirements and options can vary widely by state. We can help you determine what is required by your state. You may also find information on our state information pages.

Medical Coverages

Medical payments or personal injury protection coverage are the most common medical coverages. These coverages may assist with medical expenses for you, relatives, and possibly passengers as a result of an accident. The states determine which coverages are offered and have different rules about who and what is covered. We can help you determine what is required by your state. You may also find information on our state information pages.

There are other coverages that are not required by your state but can provide you with additional protection. If your vehicle is financed or leased, your lienholder may require you to carry collision and comprehensive coverage on your policy to protect their interest.

Collision Coverage

Collision helps repair your vehicle when it hits or is hit by another vehicle or object. You can use collision whether you're at fault or not.

Comprehensive Coverage

Comprehensive is coverage for damage to your vehicle. It covers your vehicle in the event of a theft or vandalism. It can also help with losses resulting from flood, hail, and when you hit an animal.

Additional coverages help you personalize your car insurance policy. You may want rental reimbursement to help with rental expenses due to a covered loss. Emergency road service can help provide roadside assistance for tire changes, jump starts, or a tow if necessary.

Check out the car insurance coverage information page to learn more about these and other available coverages.

How can I customize my car insurance policy to best meet my needs?

Even though you must have the state required coverage, you can still customize your policy. You may decide to carry higher limits than the state minimums for extra protection.

You can also select your deductible amounts on certain coverages. Or, you can add coverages to help with roadside assistance, rental, or even mechanical breakdown. You may also want to consider an umbrella insurance policy.

How much does "full coverage" car insurance cost?

As we mentioned before, there is no standard definition of "full coverage" car insurance. We can help you make sure your policy meets your state's requirements along with your individual situation.

Your premium is affected by the types of coverages, limits, and deductibles you choose. If you are comparing car insurance rates, it is important to keep this in mind.

If you decide to carry higher limits than required by the state, the cost of your policy will probably be more than someone with the minimum limits of coverage. Or, if you choose a higher deductible, the cost for those coverages is normally lower than if you carry a lower deductible.

Please note:

The above is meant as general information and as general policy descriptions to help you understand the different types of coverages. These descriptions do not refer to any specific contract of insurance and they do not modify any definitions, exclusions or any other provision expressly stated in any contracts of insurance. We encourage you to speak to your insurance representative and to read your policy contract to fully understand your coverages.

Liability-only insurance pays for injury and damage to others you're responsible for. In comparison, full-coverage policies cover both your liability and property damage to your own vehicle.

When finding the right car insurance policy for you, it's important to understand the different types of coverage and how much you need, including whether you want liability or full-coverage car insurance.

Liability vs. full-coverage insurance cost

On average, we found you could save more than $1,300 per year when you buy minimum liability coverage instead of a policy that includes comprehensive and collision insurance and higher liability limits.

Find Cheap Auto Insurance Quotes in Your Area

Farmers is the most expensive for full coverage — a policy costs $2,527 per year. However, drivers insured with Farmers could save $1,586 by choosing minimum liability coverage.

What is liability insurance vs. full coverage?

Liability-only car insurance will cover damage to other vehicles or injuries to other people when you're driving. Full-coverage policies includes liability insurance and additional protection to cover damage to your own vehicle.

In most states, you are required to have a minimum amount of liability coverage. Full coverage includes your state's required liability coverage plus comprehensive and collision coverage. It's typically only required if you lease or finance your car.

What is liability-only insurance?

Liability insurance covers the cost of injuries to others and damage you cause in an accident.

Liability insurance does not cover damage to your own car or injury to yourself — only damage to others for which you're legally liable.

Liability coverage is split into two components: bodily injury liability and property damage liability.

• Bodily injury liability coverage will cover the cost of another person's injuries if you are at fault in an accident, up to the policy's limits. Policy limits usually show two figures:

  1. The maximum amount paid per person injured in an accident
  2. The maximum amount paid for the entire accident

  Typically, the maximum amount for the entire accident is double the per-person limit. For example, a policy might limit coverage to $15,000 per person injured and $30,000 for all injured people.

• Property damage liability coverage pays for damage to other vehicles — or property — when you are at fault. The policy limit for this type of coverage is listed as a single dollar amount, representing the maximum payout per accident. However, this does not cover damage to your own vehicle.

If you live in a state that does not require car insurance, like New Hampshire or Virginia, you're still financially responsible for injuries and property damage resulting from an accident. So, we recommend you buy some sort of coverage.

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What is full-coverage insurance?

Full coverage doesn't mean a policy has all the bells and whistles. This term refers to policies that include liability coverage along with collision and comprehensive insurance.

• Collision insurance covers you in situations where you're driving, and your vehicle is damaged by another vehicle or object, regardless of who is at fault. Collision coverage is usually not offered on its own and is purchased with comprehensive insurance.
• Comprehensive insurance will pay for repairs in noncollision incidents, also referred to as "acts of god." This includes damage due to vandalism, weather, natural disasters, falling objects, animals and theft.

Many times, full-coverage insurance also implies that a policy has higher liability limits than the state requirement. That means you'll have more financial protection if you cause an accident and have to pay another driver's medical bills or repair their car.

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Collision and comprehensive insurance usually will pay for damage to your car up to its actual cash value . When making a comprehensive or collision claim, you will be responsible for covering the cost of your deductible, which may range from $250 to $1,000.

Full coverage is not legally required on a state level but is often required by your lender if you lease or finance your new car.

You may be required to purchase this coverage because it guarantees you'll be able to pay off at least a portion of your loan if your car is totaled in an accident.

Is it better to have full coverage or liability-only insurance?

We recommend full coverage if you cannot comfortably afford the cost to replace your car if it's destroyed or stolen.

Do I need full coverage on my car?

If your car is leased or financed, the bank or car dealership may require you to buy a full-coverage policy.

If you own your vehicle outright, you have no obligation to buy full coverage. However, full coverage is worth the cost if your car is newer or on the expensive side or if you'd have trouble affording a replacement if it were destroyed or stolen.

When should you drop full coverage on your car?

As your car ages, collision and comprehensive coverage become a worse deal. This is because the value of a car drops faster over time than the cost of comprehensive and collision coverage.

For example, the cost to add full coverage to a new car is often about one-tenth of the car’s value. But for a 10-year-old car, the cost to add is one-fifth of the car's value. That means it's a worse deal, even though the price of coverage is lower.

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The right time to drop full coverage will vary depending on your overall financial situation and your risk tolerance. However, drivers should consider dropping comprehensive and collision when the value of their car falls to between four and six times the annual cost of coverage.

That typically occurs when your car is between 8 and 12 years old and worth around $5,000 to $10,000.

Your car’s value will depend on its age, mileage and general wear and tear. Insurers use their own methods to calculate the value of a given used car, and you probably won't be able to assess the value of your car by yourself.

If you want a ballpark figure of your car's value, Kelley Blue Book and other car value estimators can help you estimate the value of your vehicle. Though it's not exact, this number can guide you on whether the value of your car exceeds the cost of buying full coverage.

Methodology

To compare auto insurance rates, we gathered quotes from every state. Our sample driver is a 30-year-old man driving a 2015 Honda Civic EX with a clean driving record and an average credit score.

Our car insurance rates for minimum-coverage policies show the average cost of a policy that meets each state's minimum requirements for auto insurance coverage.

Full-coverage rates are based on the following limits. If these limits are lower than those in any given state, the quote was adjusted to match the state's limits.

ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes may be different.