Full Coverage Car Insurance: Who Needs It?

Is full coverage car insurance right for everyone? See how it works and if it makes sense for you.
Last updated May 13, 2021 | By Ben Walker
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If you know how car insurance works, you can better decide what types of coverage might be right for you — including liability, collision, and/or comprehensive insurance. You may also be interested in a full coverage car insurance policy, which implies overall coverage for your vehicle.

In fact, full coverage car insurance isn’t a policy at all. It’s a term for a combination of different coverages that help protect you and other drivers in certain situations. When these coverages are grouped together, you have what’s considered full coverage car insurance.

Here, we’ll go over the types of car insurance that make up full coverage and whether you need them.

In this article

What does full coverage car insurance consist of?

Full coverage car insurance typically consists of these coverages:

  • Liability insurance can cover expenses from an accident that you cause while you’re driving. These expenses may include repairs for damaged property or medical bills and lost income if you’ve injured someone.
  • Collision insurance can cover expenses for repairs or replacement of your damaged vehicle if you collide with any object, car or otherwise.
  • Comprehensive insurance can cover repairs or replacement of your damaged vehicle for events that are beyond your control. This may include theft, fire, hitting an animal, vandalism, and more.

Because these are the three most common types of car insurance, insurance agencies will frequently offer them together as a package and label it as full coverage car insurance. Depending on which state you live in, you may also see other policies included in a full coverage package.

Many states require drivers to carry a certain amount of car insurance coverage. In most states, it’s illegal to drive if you don’t have some form of car insurance — typically liability insurance. In some states, though, you need more coverage than that.

In Connecticut, for example, uninsured/underinsured motorist coverage is required by law. You may see this type of coverage included in full coverage car insurance packages. In Hawaii, you’re required to have personal injury protection (PIP) coverage, so it would make sense for full coverage packages in Hawaii to include PIP insurance.

As you can see, full coverage car insurance packages may vary by state, but you can usually count on the inclusion of liability, collision, and comprehensive coverage.

When should you purchase full coverage car insurance?

Most of the policies that make up a full coverage car insurance package aren’t required by law, but it’s usually a good idea to have some coverage. You can go with the bare minimum and still drive legally, but that won’t be very helpful if you get into an accident. For situations in which you might need full coverage car insurance, check out these examples.

1. If you live in a high-traffic area

More time spent on the road with more drivers around means you may have a higher risk of getting into an accident. If you have a daily commute in a high-traffic area, you may want to consider looking into full coverage car insurance.

With full coverage, you can rest assured you would be covered if you got into an accident, whether it was the fault of another driver or yourself.

2. If you own an expensive car

Expensive vehicles aren’t only expensive when you buy them, but also when you have to perform maintenance and repairs on them. If you want to make sure you’re not footing the entire bill if you get into an accident, full coverage might be a good option.

If you think paying thousands of dollars to repair your average sedan is a lot of money, think about how much more it would cost to repair an expensive vehicle like a Porsche, BMW, or Audi. Because these are luxury-branded vehicles, you can expect repair costs to be higher than average. Even if you don’t get in an accident, your car could still get damaged.

A random act of nature could do plenty of damage to your vehicle. Hail storms can cause serious dents and break windows. A tropical storm or hurricane could flood your vehicle. Comprehensive insurance, commonly found in full coverage insurance packages, could cover you in these cases.

3. If your car is leased or financed

When it comes to leased or financed cars, you may have no choice but to purchase full coverage insurance. The bank or company you’re leasing or financing through may require collision and comprehensive coverage on your vehicle. This would be an added protection for the lender as the technical owners of the vehicle.

Typically, a leased vehicle will require more coverage than a financed vehicle. With financing, the desired end result is taking over ownership of the vehicle, but with leasing, you’d be returning it at the end of the lease. Because the owner of a lease will always be the company you’re leasing the vehicle from, it has more to lose if your car doesn’t have full coverage and you’re in an accident.

Almost every state requires liability insurance. If you’re required to have collision and comprehensive coverage on your leased or financed vehicle, it can be grouped together with the state-required liability insurance. At that point, you’d have a full coverage car insurance package on your vehicle.

Three times full coverage insurance might not be worth it

Full coverage insurance might offer some great protection, but it may not always be worth it. In certain situations, you could be better off saving money instead of paying for additional car insurance coverage.

1. Your car is old

With older vehicles — excluding expensive antiques and classic cars — it’s often not worth it to maintain full coverage insurance. Older cars can have high mileage, wear and tear, and significant depreciation, which cause their value to drop tremendously. At a certain point, your car insurance premiums will cost more than what you would potentially get as a payout if your car was totaled.

When you reach that point, you may want to forgo the full coverage.

2. You don’t drive very often

This is a simple measure of calculated risk. If you don’t drive much, it’s less likely you’ll be involved in an accident. Of course, this also depends on your driving behavior. If you mainly use your car to get groceries and run errands around town every once in a while, it might make sense to drop the full coverage.

3. You aren’t worried about the potential cost of repairs

During your car’s lifetime, you may reach a point where it’s no longer new, but it’s not necessarily old either. In this middle ground, it may still cost thousands of dollars for repairs or a replacement. And yet, you could still be paying more than $1,000 each year on full coverage car insurance.

You might consider dropping down to just the required insurance coverage for your state to save money on premiums. If you already have some savings built up as well, you could put that money toward any repairs if you’re an accident. If you don’t get into an accident, you’ll end up saving a lot of money over time.

How to get the best price on a new policy

To get the best price on a new policy, you can apply these tips:

  • Decide which coverages you need. Required insurance will vary by state, but you can also determine what you might need by doing a quick overview of your vehicle. If it’s brand new, you might want full coverage. If it’s old and not worth much, the required coverage could be the better option.
  • Determine how much coverage you need. Each situation is different, but higher coverage limits are typically better. The more coverage you have, the less likely you would have to pay anything out of pocket if there’s an accident.
  • Shop around. If you want to save money on car insurance, you need to compare prices between multiple providers. Online marketplaces make this process simple. You may be able to receive personalized quotes from providers in your area in five minutes or less.

FAQs about car insurance

What is full coverage car insurance?

Full coverage car insurance is a combination of different policies, usually sold as a package by insurance providers. You can typically find liability, collision, and comprehensive coverage included in this package.

How much car insurance do you need for your car?

Most states require you to have liability insurance for your car. Some states also require uninsured/underinsured motorist coverage and/or personal injury protection coverage. Those are the required coverages, but any additional needed coverage will depend on your situation.

What car insurance is the best?

Any car insurance policy that fits your needs is the best car insurance. This may be multiple policies combined together or just one policy by itself. To get car insurance, you should first research the types of coverages available and determine which ones you need. Then, decide how much coverage would be right for you.

With that information in mind, you can shop around and get free quotes from different insurance providers. Using an online marketplace could help you compare quotes quickly and easily.

How much is car insurance monthly?

Your monthly car insurance premiums depend on a few factors, including your coverage amount, your insurance provider, and your driving record. If you have a good driving record, you can expect lower premiums. If you want higher coverage limits and lower car insurance deductibles, you may have to pay higher premiums.

The final word on full coverage car insurance

Full coverage car insurance isn’t exactly what it sounds like. You won’t be fully covered for every driving incident out there, but you could be covered in many different situations. Because full coverage insurance typically includes liability, collision, and comprehensive coverage, you could have a lot of your bases covered.

Whether you need this much coverage depends on your situation. Car insurance can be expensive, so you should approach getting a new policy with a clear idea of your coverage needs and how much is necessary. Then, shop around and find quotes using different online marketplaces. You could end up saving a lot of money.

  • Save up to $500 a year on your car insurance
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Ben Walker Ben Walker is a credit cards and travel writer at FinanceBuzz who loves helping others achieve their travel goals through financially-sound decisions. For nearly a decade, he has been using credit card points and miles for the sole purpose of traveling the world. Ben has been featured in The Washington Post, MSN, Debt.com, and Finder.com.