What Is Full Coverage Car Insurance?

Full coverage auto refers to a combination of coverages that can provide financial protection if you have an accident or if your vehicle is damaged in other circumstances, such as vandalism or extreme weather.

Although not required by law, this coverage package may be necessary under certain circumstances. It can also help you avoid paying out of pocket for common auto insurance claims, but it’s not right for everyone. Understanding what is covered in a full coverage policy can help you determine if it is worth considering.

What’s In a Full Coverage Policy?

Full coverage policies can vary in both structure and availability, but generally policies include:

  • Liability Insurance: Liability car insurance offers financial protection if you’re at fault for an accident. A liability insurance policy generally includes bodily injury liability coverage and property damage liability coverage. 
  • Collision insurance: Collision coverage will pay for damages to your car that result from colliding with another object, such as a vehicle, tree, or retaining wall. 
  • Comprehensive insurance: Comprehensive coverage pays for vehicle damages resulting from incidents other than a collision. This includes falling objects, fire, and vandalism. It also will pay if your car is stolen.

In addition to liability, collision, and comprehensive insurance, full coverage may also include other types of coverage, especially if it’s required by state law. As such, a full coverage policy in your state may include:

  • Uninsured/underinsured motorist coverage (UM/UIM): If the other driver is at fault but doesn’t have insurance or enough insurance to cover your loss, uninsured/underinsured motorist coverage will reimburse you for bodily injury expenses and potentially property damage costs, depending on where you live. It also provides coverage if you are a victim of a hit-and-run. 
  • Personal injury protection (PIP): This pays for medical expenses for you and your passengers for injuries sustained in a car accident. PIP also could pay lost wages, expenses for services you can’t do while injured (such as housecleaning), and funeral costs. 
  • Medical payments (MedPay): This pays for medical expenses for you and your passengers if injured in a car accident. While MedPay covers related expenses, such as an ambulance ride, it doesn’t cover other expenses like PIP does.

Liability vs. Full Coverage Insurance

Liability insurance refers to a single policy that provides coverage if you’re at fault for an accident resulting in bodily injury or damages to another driver, their vehicle, or their passengers A liability-only car insurance policy will help you pay for the other driver’s expenses – medical bills, car repairs, etc – but not yours. That’s where full coverage can help.

Full coverage refers to a collection of coverages that include liability insurance as well as additional forms of coverage, such as collision insurance, comprehensive insurance, MedPay, and personal injury protection.

In most states, drivers must carry a liability insurance policy that meets the state’s minimum coverage requirements. There are no laws that require drivers to carry full coverage, but lenders often require it as part of a loan agreement. The same may be true for drivers that lease a vehicle.

Before shopping around and checking car insurance quotes, it’s important to know if you are required to carry full coverage and, if so, how much coverage you need. You can find information about state requirements, including bodily injury liability and property damage liability coverage requirements, through the Department of Motor Vehicles (DMV). Contact your lender or lessor to find out what insurance requirements are included in your agreement.

Who Needs a Full Coverage Policy?

If you financed your vehicle and still have a balance on your auto loan, you may need a full coverage policy. You may also need a full coverage policy if you lease your car. That’s because your lender or lessor technically owns your car until you pay off your loan or your lease agreement ends. As such, they have a financial interest in your vehicle, and a full coverage policy ensures they’ll be paid if the car is damaged before a loan is paid off or you return the car when your lease ends.

If you make a monthly payment on your car, read the contract carefully to see if you are required to carry full coverage and, if so, how much you need.

Beyond that, full coverage car insurance is optional. If being at-fault in a car crash would absolutely destroy your family’s finances, full coverage is worth discussing with your insurance company. However, if you have good liability coverage, and your car is old, paid off, and not worth much, you can probably drop collision and comprehensive coverage, since the extra cost of your insurance may, over time, outweigh the cost of repairs or replacement.

Is Full Coverage Worth It?

A full coverage auto insurance policy should ensure that you have enough insurance to protect all your assets in the event of a major crash, collision, or incident. Of course, with any financial decision, there are upsides and downsides to full coverage insurance.


  • Can help you meet state, lender, or lessor requirements
  • Can protect you if you’re in an accident and the at-fault driver doesn’t have coverage
  • May cover non-accident related damages, such as vandalism and theft 
  • May cover your medical expenses if you are hurt in an accident


  • Is more expensive than basic liability coverage 
  • Won’t cover normal wear and tear on your vehicle 
  • Does not provide coverage if you use your car for commercial work

Full Coverage and Deductibles 

When you purchase a full car insurance coverage policy, you’ll need to select deductibles and limits. A deductible refers to the amount of money you pay out of pocket before your insurer will cover remaining expenses. How and when your deductible comes into play depends on the type of claim you make.

Liability car insurance does not include a deductible. If you’re found legally responsible for an accident, your insurer will cover the expenses up to your liability limit. For instance, if an accident resulted in $15,000 in property damage and your limit is $25,000, your insurer will cover the costs. If, however, the total cost of damages was $27,000, your insurer will cover up to your policy limit and you will have to pay the remaining $2,000 out of pocket.

Comprehensive and Collision coverage both carry deductibles. That means if your claim is covered under either of those policies, you’ll need to meet your deductible before your insurer will pay the remaining expenses. For instance, if you have a $500 deductible and a tree falls on your car and causes $4,000 in damage, you will pay $500 and your insurer will pay $3,500.


Is full coverage auto insurance really full coverage?

Though full coverage is a common term, it’s a misleading one. A full coverage car insurance policy does not actually cover every type of collision, crash, or incident, nor can you purchase a full coverage policy. Full coverage auto insurance is a package deal of the three basic types of auto insurance coverage that gives you more protection than the minimum coverage required by your state.

What does full coverage car insurance include?

Full coverage auto insurance includes a combination of liability, collision, and comprehensive policies, which provide enough coverage to protect you in most scenarios that could occur with your vehicle.

If you intend to or already have purchased full coverage, it’s important to read your insurance contract. It will include details about what isn’t covered under a full-coverage policy. You can also speak to your insurance agent to discuss any coverage exclusions.

Do I need full coverage car insurance?

If your lender (the bank or institution that handles a vehicle loan or lease) requires full coverage, then you need full coverage. Otherwise, whether or not you need full coverage depends on your family’s financial situation and your tolerance for risk – that is, whether it’s worth it to you to pay higher car insurance rates in exchange for more protection in the event of a crash.

How can I get a full coverage car insurance policy?

It’s easy to buy a full coverage auto insurance policy. Most auto insurance companies will sell a full coverage policy, or a combination of coverages that provide what we know as full coverage.

How much is full coverage car insurance? 

The cost of a full coverage auto insurance policy will vary based on several factors. To determine your rate, an insurer will look at your age, location, driving record, and credit history, among other things. Your rate will also depend on the limits and deductibles you choose.

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