Full Coverage Car Insurance

In all U.S. states, drivers are required to maintain liability auto insurance or have some other proof of financial responsibility. Like many drivers, you may assume that full and liability coverage are one and the same, but nothing could be further from the truth. In most cases, liability coverage is the absolute minimum that you must possess to drive legally. However, it often falls short of meeting drivers' true coverage needs.

Many drivers are better off with car insurance policies that also include other types of coverages. Often these types of car insurance policies are referred to as full coverage car insurance.

What Is Full Coverage?

The first thing you should know is that "full" coverage is a bit of a misnomer as there is no such thing as auto insurance that protects you under every possible circumstance. That being said, there isn't a true definition of what full coverage is. Generally speaking, full coverage car insurance includes liability insurance (which is required in almost every state) AND coverages that will help cover damages to your car.

Remember, liability insurance only covers damages of another person's property and/or injuries suffered by others. It does not cover your own property damage or injuries.

What Does Full Coverage Include?

Again, there is no true definition of what full coverage is, but typically people consider full coverage to include at least:

  • Liability insurance.
  • Collision coverage.
  • Comprehensive coverage.

An insurance policy can be made even "fuller" by adding these types of coverage:

  • Uninsured/underinsured motorist coverage.
    • This protects you financially if you incur damages during a crash with an uninsured or underinsured driver. It's most commonly available for property damage but also available for bodily injury in some instances.
  • Personal Injury Protection.
    • Often abbreviated as PIP and sometimes known as First Party Benefits, personal injury protection is required in some states. It pays for things like medical expenses, funeral expenses, the cost to replace household services and loss of income.
  • Rental reimbursement coverage.
    • This covers the cost of renting a car while your car is in the shop or otherwise not available.
  • Roadside assistance.
    • This provides many of the same benefits as auto clubs like AAA. It often covers the cost of towing and labor.

Minimums and Limits

For insurance coverage to be as complete as possible, limits for bodily injury and property damage should reflect your personal financial situation. Similarly, deductibles should be in line with what you can reasonably afford to pay. The highest liability limit available is typically $250,000 per person for bodily injury, $500,000 per accident and $100,000 for property damage. Remember: You will be responsible for any costs that aren't covered by your policy. Make sure that your limits reflect this.

Do You Need Full Coverage?

Like some people, you may think that it's better to be safe than sorry and opt to buy full insurance coverage to cover your bases. However, you could easily end up paying for coverage that you don't really need.

At the very least, you are required to maintain liability coverage or to provide some proof of financial responsibility. Full insurance coverage makes sense if you have a new vehicle, a very valuable vehicle or a vehicle that you are still paying off. In the case of the latter, your lender will typically require you to maintain both collision and comprehensive coverage to protect their investment until you own the vehicle free and clear.

If you are at the point where you can afford to replace your vehicle without any help from insurance, you should be able to safely drop comprehensive and collision coverage. Once your vehicle is paid off, you might also want to increase your deductibles to reflect your savings going forward.