“Full coverage” car insurance typically refers to a combination of liability, collision, and comprehensive coverage.
Read more” > Taylor Medine Edited by Read more” > Chris Jennings
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
Car insurance isn’t one-size-fits-all. Insurance providers offer different levels of coverage that you can customize to protect you, your family, and your ride.
“Full coverage” is another way to describe a high level of protection for your car in the event someone steals it or damages it in an accident. But before you opt for full coverage, it’s important to determine how much coverage is necessary so you don’t end up overpaying for insurance you don’t need.
Here’s what you need to know about full coverage car insurance:
Full coverage car insurance describes a car insurance policy that includes liability coverage and protections like comprehensive and collision insurance. However, there’s no consensus on what a full coverage policy includes. Full coverage may consist of different types of coverage depending on your insurer and the state you live in.
Most states require that each driver has at least liability insurance, which covers bodily injury and property damage to other people if you get into an accident.
However, adding comprehensive, collision, and other protections on top of that liability coverage could help cover your own costs if your car is damaged.
Again, there’s no standard definition for what constitutes a full coverage car insurance policy, but in general, the term refers to a policy that includes the following:
Your car insurance provider may also provide these common coverage types as part of a full coverage policy, and your state might even require some of them:
Check Out: What Happens if You Get Into an Accident Without Car Insurance?
While full coverage car insurance provides more protection for your car, the coverage has some limitations. Insurance will likely not cover small dings, dents, and general wear and tear to your car. Insurance will also not handle regular replacements or repairs, such as replacing tires, fixing brakes, or changing the battery.
Your car may also no longer be covered by your policy if you drive across international borders. And if you don’t have rideshare driver coverage, your car insurance may not protect your car if you get into an accident while driving for a rideshare company.
The cost of full coverage and liability-only coverage depends on the coverage limits, your deductible, and other factors like where you live and the type of car you drive.
Below is the average premium nationwide for a liability-only policy compared to the average premium for a combined (“full coverage”) policy with liability, comprehensive, and collision coverage.
You’ll notice that going with a liability-only policy could save you a decent amount of money annually. But if an accident happens, you won’t have help covering your own repair costs since liability only insures property damage and injuries to others.
If you choose the minimum liability insurance required by your state, also consider that it might not be enough to financially protect you in an accident. In Alabama, for example, you’re required to have just $25,000 in bodily injury per person, $50,000 in total bodily injury per accident, and $25,000 in property damage per accident.
If you get into an at-fault accident and exhaust those coverage limits, you could be on the hook for what insurance doesn’t cover. That’s why the cheapest policy may not be the best, and it’s important to find a policy with coverage limits that fully meet your needs.
You’ll want to consider these benefits when deciding between a full coverage car insurance policy and one with fewer protections:
Learn More: How Long Do Car Accidents Stay on Your Record?
Before purchasing full coverage car insurance, consider these disadvantages:
Think about your car’s value when determining if you need full coverage insurance. If your car’s paid off and not worth much, choosing full coverage might not make sense.
If your car is totaled, the cash value payout you receive from the insurance carrier after the deductible could be less than the premium payments you made. In this situation, getting liability coverage only, paying for repairs out of pocket, or junking the car after an accident could make more financial sense.
However, full coverage could protect you from having to shoulder the entire financial burden following an accident if you own a newer, more valuable car. If you crash, your car is stolen, or it’s damaged by Mother Nature, insurance can step in to help you pay.
Disclaimer: All insurance-related services are offered through Young Alfred.
Taylor Medine is a Credible authority on personal finance. Her work has been featured on Bankrate, Experian, The Balance, Business Insider, Credit Karma, and more. She’s also the author of The 60-Minute Money Plan, a self-published intro to budgeting guide for people who hate budgeting.
Home » All » Car Insurance »
© 2023 Credible
Credible Operations, Inc. NMLS ID# 1681276 | NMLS Consumer Access | Licenses and Disclosures