What is full coverage car insurance?

Full coverage car insurance refers to a combination of auto insurance for your vehicle. This bundling of coverage goes beyond the minimum car insurance you need to drive on public roads to offer extra protection for things like fire and theft.

In this article, we’ll explore what is included in full coverage insurance, who needs this type of policy, and we’ll highlight the wide range of insurance options available in most packages.  

What is full coverage car insurance? 

The term “full coverage car insurance” is a kind of catch-all that brings together a combination of mandatory liability coverage and auto insurance against damage you cause to your own property as well as other perils like theft or fire. 

In short, full coverage car insurance means that you’re covered if your car is damaged in a wide variety of scenarios, as well as if your vehicle is stolen or vandalized. However, the exact protections you are offered will vary from state to state and company to company. There is no specific, official “full coverage” policy type. Instead, it is used to define a combination of coverages. 

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Who needs full coverage car insurance?

While there’s no law that requires you to have full coverage to drive on public roads, there are times when you will need full coverage car insurance. For example, most finance and leasing companies make full coverage car insurance a condition of the financing terms. This is because they need to protect their collateral.

Even if you don’t finance your vehicle, full coverage car insurance is a good idea. That way you’re protected from almost any piece of bad luck that might strike. We say almost because it’s important to know exactly what your full coverage car insurance protects you against. 

Different Types of Car Insurance 

Because full coverage auto insurance is a non-specific term, “full coverage” for one individual may mean something different to another consumer. Here are some of the policies you should look for in your full coverage car insurance plan.

Liability Coverage

The most common type of car insurance coverage is liability insurance. Required in all states except for New Hampshire and Virginia, liability coverage includes bodily injury and property damage. Keep in mind that if you don’t have liability coverage, you are still legally responsible if you’re at fault.

Bodily injury coverage helps pay for another person’s medical bills if you caused the accident. Usually, there is a maximum payable amount per person injured and a maximum payable amount per accident. Property damage liability coverage pays for repairs you cause to another person’s vehicle or property. For both coverages, you can choose minimum protection or you can pay to be covered at higher limits.

Comprehensive

If your vehicle is damaged for reasons not involving a collision, then this is where optional comprehensive coverage applies. This may cover losses stemming from an animal strike, vandalism, hail, and theft.  

Unless you finance or lease your vehicle, comprehensive coverage is optional, but comprehensive coverage is a core piece of insurance in any extended or full policy. 

Collision

Not all vehicles need to have collision auto insurance coverage, but if there’s a lien on your car, then you do. A lien means that the company financing or leasing the vehicle holds the title. In this case, your insurer would make payment to the lienholder if your vehicle is written off. 

Collision coverage helps reimburse you for the cost to repair or replace your vehicle if it is damaged by another vehicle or hits a stationary object such as a wall. Collision coverage kicks in whether you are at fault or not. 

Both comprehensive and collision coverages come with deductibles and limits. With the deductible, you absorb the first $500 before the insurance pays the remainder. You can set your deductible lower or higher, which will affect your insurance premium.

Personal Injury Protection (PIP)

Personal injury protection (PIP) helps cover medical expenses caused by a car accident. PIP coverage may be used whether you are at fault or not. PIP also protects family members who live with you. PIP coverage is required in states with no-fault insurance regulations. 

Uninsured Motorist (UM)/Underinsured Motorist (UIM) 

These types of coverage protect you if the other driver does not have enough or any car insurance. They are most often sold together but are sometimes sold separately. 

Uninsured motorist coverage protects you against motorists who are driving without insurance. UM coverage is available in all states and is required in some.  

Underinsured motorist coverage protects you from at-fault drivers with insufficient insurance coverage. For example, if you’re injured in an accident and your bills exceed the at-fault driver’s policy limit, then UM/UIM insurance will cover the remainder. This type of coverage can include benefits for damage to your property, as well as loss of income, medical expenses, pain and suffering, and funeral expenses. 

Rental Car Reimbursement

Another optional coverage plan is rental car reimbursement. This plan kicks in only when your insurer is covering the repairs to your vehicle. If the other driver is deemed at fault, their liability insurance will reimburse you. Rental car coverage is only used for an accident. It does not cover vacation rentals or routine repairs.

Roadside Assistance

Most insurers also offer roadside assistance coverage. Here, if your car breaks down and needs to be towed, a tow truck may be requested to bring your vehicle to a repair shop or your home, depending on the policy.

Finding the Best Full Coverage Insurance

Full coverage car insurance isn’t a specific, defined type of insurance policy. It may include every type of car insurance available, or it may forgo some of them. The important thing is that you compare the policies available to you to make sure you’re covered for everything you expect to be insured against. 

At a minimum, the protection you need is what is required by your state, and then also by your lender or leasing company. You can compare rates and often negotiate the exact mix of insurance types, deductible amounts, and coverage limits that work for you. 

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