What is full coverage car insurance?

There’s an old saying that the only certain things in life are death and taxes, but for vehicle owners, the list can be expanded to include car insurance. Every driver in the United States is required to have it, though the amount and coverage requirements vary from state to state. One term you might have heard is “full coverage,” but the definition is inconsistent between insurers, and it can be confusing to figure out what is and isn’t included in the policy. Let’s take a closer look at full coverage, what it is, and what it may include.

Liability coverage is the baseline

Liability coverage is the most basic insurance available, and it’s required in all 50 states. It protects you against financial ruin for the damage you cause to others in a crash, including their property or person. The amount of liability coverage varies between states, but it’s a requirement everywhere. Though the idea is to keep you from ravaging other peoples’ property and not be able to pay for it.

What does full coverage insurance cover?

Here’s where things get tricky. There’s no legally required definition of full coverage insurance, and some insurers or agents might refer to it as comprehensive coverage. In general, full coverage includes liability, collision, and comprehensive coverage, but some insurance policies may include uninsured motorist protection, GAP insurance, and other benefits. It’s important to note that states don’t require full coverage insurance, but if you finance your car, your lender or bank may require it.

It can also be tempting to cut extra insurance coverage to save money, but doing so could leave you vulnerable to a range of expenses after a wreck, including but not limited to replacing your vehicle, repairing or replacing the other person’s vehicle, and paying for medical expenses. It’s also important to note that even if your loan doesn’t require GAP insurance, paying the small fee for coverage can be a great idea. GAP covers you for the difference between what you owe for a vehicle and its actual value, which can prevent having to make a lump sum payment after a crash to settle your tab with the bank.

How much is full coverage insurance?

Full coverage insurance and all other auto insurance costs depend heavily on you, how you drive, what you drive, and where you live. Factors like your driving record and credit score can impact your charges, and insurance companies sometimes charge more for newer, more expensive vehicles. According to Bankrate, the national average for car insurance is $2,014 for full coverage and $622 for liability. Your costs may vary wildly from that amount, but the best ways to save money on car insurance are to shop around and try to keep your driving record as clean as possible. 

What is comprehensive car insurance coverage?

Comprehensive coverage has your back for damage not caused by a wreck. This can include weather events, floods, theft, vandalism, animal damage, and other special cases. Like full coverage insurance, your lender may require that you have comprehensive coverage during a loan or lease, but it’s not required under state laws and might not be worth the money on older, less valuable car models. At the same time, comprehensive coverage is an extra layer of protection and can significantly boost your peace of mind, especially if you live anywhere near nature (hint: We all do).

What is collision insurance?

Collision insurance covers your vehicle for damage caused during a crash. That can include hitting another vehicle or a stationary object like a tree, fence, or road sign. Carrying collision insurance on newer, more expensive cars is a good idea, as the repair or replacement costs can quickly add up. You may also be required to have collision coverage while you’re paying on a loan or lease.

Other types of auto insurance

Depending on your insurer, you may have access to several other types of coverage that can bolster your financial protection after a crash. Uninsured and underinsured motorist insurance protects you if the other person in the accident lacks enough coverage for the damage they caused. Some states require it, so it’s a good idea to know where you stand. Personal injury protection covers your medical bills and sometimes lost earnings, and some states require that motorists have personal injury protection insurance (PIP).

Full coverage insurance provides solid financial protection and can save you from a desperately costly situation after a crash. Still, it’s not required and is not best for every vehicle or situation. Liberty Mutual estimates that a full coverage policy costs 64 percent more than liability coverage alone, so it’s best to understand what you need and don’t have to pay for. Most insurers allow policyholders to purchase coverage a la carte, so it’s possible to piece together insurance coverage that meets your exact needs.