What Does Full Coverage Auto Insurance Actually Cover?

Full coverage auto insurance covers different things depending on which insurance company you choose. Generally speaking, full coverage auto insurance includes bodily injury liability, property damage liability, collision, and comprehensive coverage. A full coverage policy can protect you from paying high costs such as medical bills (for yourself or other people), and vehicle repairs.

Not everyone needs full coverage insurance, but it might be worth it if you drive a lot, have an expensive car, or live in a natural disaster-prone area. It might also be worth it if you want greater peace of mind than state minimum insurance would give you.

What is full coverage auto insurance?

Full coverage auto insurance is a package of insurance policies that generally includes at least bodily injury and property damage liability, collision, and comprehensive coverage. These policies can also include other types of insurance, such as personal injury protection or medical payments, that are customized to meet the insurance requirements in your state and fit your individual needs.

What about basic liability coverage?

Basic liability insurance coverage typically only covers damages or injuries you cause to someone else, and only up to the specified limits of your policy. You are responsible for the cost of vehicle repairs or replacement, medical expenses, and any other incidents that exceed your policy limits. Basic liability coverage can leave you financially exposed.

A full coverage insurance package generally goes above the basic liability insurance required by law and offers more complete coverage. You’re less likely to have to pay for the cost of an accident or damage to your vehicle all by yourself.

Of course, the more insurance coverage you add, the more your premium is likely to go up, so it's essential to find a good balance between making sure you’re covered for random accidents or problems and not having so much coverage that you’re wasting money.

The eight types of coverage included in full coverage insurance

Full coverage auto insurance is not a standardized term throughout the insurance industry. Each company may define “full coverage” differently and offer different policies based on where you live or the car you drive. But there are a few policy types that are in basically every company's full coverage option because they are often required by state law.

1. Bodily injury liability

If you cause an accident, this coverage helps to pay for medical bills or loss of income if people in the other vehicle are injured. This coverage should also protect you if you are an authorized user driving someone else’s car and get into an accident.

2. Property damage liability

If you or an authorized person driving your vehicle causes an accident, this policy will help pay for damages to another person’s car or property — but not yours. Along with bodily injury liability, state laws usually require property damage liability coverage.

3. Uninsured/underinsured motorist bodily injury liability

This coverage can help cover medical costs when you’re in an accident involving an uninsured driver, or a driver with insufficient insurance coverage. It can also help pay for your medical bills if you’re involved in a hit-and-run accident, or if you’re hit as a pedestrian.

4. Uninsured/underinsured motorist property damage coverage

This type of coverage helps you cover the damage to your vehicle if an uninsured or underinsured driver hits you. Uninsured and underinsured motorist liability coverage is required in several states, so it may be part of a full coverage package provided by your insurance company.

5. Collision coverage

Regardless of who’s at fault in an accident, this coverage will help pay for damage to your car if you hit another vehicle, hit an object, roll your car, or get hit by another car. Collision coverage often has a set deductible, which is the amount you pay before your insurance kicks in. Deductibles usually range from $250 to $1000, so don’t forget to factor this into your insurance costs.

6. Comprehensive coverage

Comprehensive coverage helps you recover from losses due to damage caused by something other than a collision. There are many incidents that comprehensive coverage could cover, including:

• Theft of your vehicle
• Vandalism
• Fire damage
• Severe weather damage from blizzards, severe winds, or hailstorms
• Animal damage

Your comprehensive coverage should help you cover the costs to repair your vehicle. Some lenders require you to carry this coverage until your car is paid off.

7. Personal injury protection (PIP)

Personal injury protection coverage pays for medical expenses that you or any passengers in your car may have sustained in a car accident. Depending on the type of policy, PIP may also pay for lost wages if you can’t work, or for assistance with services you can’t perform while injured (such as house cleaning). In a worst-case scenario, PIP can even cover funeral costs.

Several states require PIP coverage for all drivers.

8. Medical payments (MedPay)

MedPay is similar to PIP in that it covers medical expenses for you and your passengers if you’re injured in a car accident. Although accident-related costs, such as an ambulance ride or a doctor co-pay, may be included under the coverage, MedPay doesn’t generally cover things like lost wages or essential services. It’s not as comprehensive as a PIP policy.

The protection you actually get with full coverage auto insurance

Although the policies above cover much of the damage you may run into on the road, they still don’t provide truly full coverage. You may need to add additional coverage to ensure you’re financially protected from all possible events.

Some of these optional policies can include

• Roadside assistance
• Gap coverage
• Rental car reimbursement
• Mechanical breakdown
• Towing and labor
• Additional coverage for custom cars, custom parts, or specialty vehicles

You might be tempted to add on a lot of optional policies for peace of mind, but remember that each add-on costs extra money each month.

Who needs full coverage auto insurance?

Full coverage auto insurance may not make sense for everyone. Basic insurance coverage is required in nearly all states, and every state in the U.S. has some kind of financial liability law for drivers. So although you must ensure you’re legally covered in your state, paying for full coverage may not make sense depending on your circumstances.

You might want full coverage insurance if you drive a high-value vehicle, live in a place prone to extreme weather or animal collisions, or have a long commute (which means you’re on the road more often and at busier times of the day).

Additionally, you may be required by your bank or leasing company to maintain certain types of insurance above the state liability limits to protect both you and your lender if you get into an accident.

When is full coverage not worth it?

Full coverage may not be worth the cost if you own an older or high-mileage car, or if you don’t drive very often.

Comprehensive and collision insurance only covers the cost of your vehicle at the time of the accident. If you have a high insurance deductible, or if your car isn’t worth very much, you may be able to drop collision and comprehensive coverage if the monthly cost of insurance over time may exceed the value of your vehicle.

Generally, if the cost of your full coverage insurance is more than 10% of the value of your car, you can consider reducing or removing some of your coverage. Because insurance only covers the current value of your vehicle, paying more than 10% of your car’s value for insurance may provide diminishing returns.

Be sure to speak with your insurance agent to ensure you are maintaining the minimum insurance coverage required in your state, and to minimize the chance that you’ll be personally responsible for any gaps if you cause an accident.

How to find affordable full coverage auto insurance

No one wants to pay more for insurance than they have to. Full coverage auto is generally more expensive than basic liability coverage, and it can be costly depending on how much your vehicle is worth and any optional policies you add on.

There are various ways to lower your car insurance costs, especially if you understand the factors that affect car insurance rates. You can usually save money on car insurance through strategies such as these:

• Taking advantage of any discounts offered by your insurance provider
• Shopping around for the best rates
• Taking a safe driver or defensive driver course
• Raising your credit score and maintaining good credit history
• Raising your deductible
• Reducing optional insurance coverage on an older vehicle
• Bundling your multiple policies (such as home, renters, or life insurance with auto) for an additional discount

If you can, comparing the cost of insurance on different vehicles before you buy a new car can also be a great way to save money on car insurance because insurance costs are based on the value of the car, its safety rating and the likelihood of theft, among other things.

Comparing costs and coverage options across multiple companies may seem like a chore, but it's one of the best ways to know that you’re getting the best deal on the coverage types you need.

FAQs about full coverage auto insurance

Bottom line

Even though full coverage auto insurance doesn’t necessarily cover everything that could happen to your car, it’s still important to consider it as an option and make an informed choice. If you’re required to keep full coverage by your lender, have a high-value car, or live in a place prone to extreme weather or fire, ensuring you have the right insurance coverage can be vital to your financial well-being.

Review your insurance policy to check your coverage type and speak with your insurance agent if you need to make any changes.

Check out recommendations for the best car insurance or get information on how to switch car insurance providers to make the best decision for you and your wallet.