What Is Full-Coverage Car Insurance?
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Written byJanet Berry-Johnson
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Janet Berry-Johnson, CPA, is a freelance writer with a background in accounting and income tax planning and preparation. She's been writing for Compare.com since 2023 and has also appeared on various business and finance sites, including LendingTree, Chime, Insurify, Forbes, and WSJ. She’s passionate about making complicated financial topics accessible to readers.
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Edited byLequita Westbrooks
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Lequita WestbrooksSenior Editor
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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Reviewed byAmanda Clear
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Amanda Clear is a licensed Property and Casualty insurance agent who runs her family insurance agency providing coverage in the states of Connecticut, New York, and Vermont. She specializes in providing customized insurance packages to her clients that provide the best coverage for the price that they can afford. She holds a bachelor's degree in English from Sacred Heart University in Fairfield, CT, and works as a freelance editor, proofreader, and writer outside of her insurance career.
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When you hear the term “full-coverage car insurance,” you might think of a policy that covers any kind of damage or mishap that could happen to your car. However, the reality is a bit more nuanced.
Full-coverage car insurance isn’t a specific policy but a combination of different types of coverages that provide a comprehensive safety net for you, your passengers, and your vehicle.
Below, we explain the meaning of full-coverage car insurance so you can make an informed decision when choosing coverage and the best auto insurance company for your needs.
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What’s Included in a Full-Coverage Car Insurance Policy?
Full-coverage car insurance includes several different types of coverage, each serving a distinct purpose. The table below explains some of the more common coverages included in a full-coverage policy. Keep in mind that your policy may differ depending on the insurance laws in your state.
Coverage Type | What It Pays For |
|---|---|
| Liability | Damage to other vehicles or property or injury to other people in accidents you cause |
| Collision | Damage to your vehicle if you’re involved in an accident |
| Comprehensive | Damage to your vehicle after events other than a collision, such as theft, vandalism, or bad weather |
| Uninsured/underinsured motorist | Your expenses if you’re in an accident with a driver who doesn’t have insurance or has insurance with insufficient limits |
| Personal injury protection (PIP) | Your and your passengers’ medical expenses and sometimes lost wages, regardless of who’s at fault in an accident |
| Medical payments (MedPay) | Medical expenses for you and your passengers in the event of an accident |
The following sections explain each of these coverages in more detail.
Liability insurance
Liability insurance is a blanket term for bodily injury liability and property damage liability. This covers costs you may be legally responsible for if you’re at fault in an accident, including damage or injury to other vehicles, property, or other people.
Most states require all registered vehicles to have liability insurance at state-mandated minimum limits.
Collision insurance
Collision insurance covers the repair or replacement costs of your vehicle if you’re involved in an accident, whether with another vehicle or an object like a fence or tree.
You aren’t required to have collision insurance by law, but if you finance or lease your vehicle, the lender or leasing company might require you to have it.
Comprehensive insurance
Comprehensive insurance pays to repair or replace your vehicle after events other than a collision, such as theft, vandalism, or hail.
Like collision coverage, comprehensive insurance isn’t a legal requirement but might be required by your lender or leasing company.
Uninsured/underinsured motorist
Uninsured/underinsured motorist insurance protects you if you’re involved in an accident with a driver who either doesn’t have insurance or whose insurance is insufficient to cover your injuries or property damage.
Some states require drivers to have uninsured motorist coverage, and some states require all insurance companies in the state to include it on policies unless declined by the customer in writing.
Personal injury protection (PIP)
Also known as “no-fault” insurance, PIP covers your and your passengers’ medical expenses and sometimes lost wages, regardless of who’s at fault in an accident.
States with no-fault car insurance laws usually require PIP.
Medical payments (MedPay)
Medical payments coverage pays for medical expenses for you and your passengers after an accident. It’s similar to PIP but generally offers a narrower scope of coverage (it doesn’t cover lost income, for example) and has lower limits.
MedPay typically isn’t required by law.
What’s the difference between liability vs. full coverage?
Most states require you to have at least liability-only coverage, which essentially protects other drivers from the financial implications of your mistakes. Full-coverage insurance extends that protection to you and your vehicle.
To illustrate the difference, imagine you’re at fault in an accident — both your car and the other driver’s car are damaged, with injuries on both sides.
If you have liability-only insurance, your policy will pay the costs associated with the other driver’s vehicle repairs and medical expenses up to your policy limits.
But if you have full coverage, in addition to covering the other driver’s costs, your policy will also pay for the repair or replacement of your vehicle.
Full-coverage insurance deductibles
A car insurance deductible is the amount you agree to pay out of pocket before your comprehensive or collision coverage kicks in. Typically, a higher deductible means a lower premium because you’re taking on more financial responsibility when you file a claim.
To understand how deductibles work, imagine a tree branch has fallen on your car, resulting in $2,000 worth of repairs. If your comprehensive coverage has a deductible of $500, you pay that $500 out of pocket, and your insurance company pays the remaining $1,500.
Deductibles are a one-time payment per claim, not an annual or recurring fee.
What’s Not Included in Full Coverage?
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Several types of coverage fall outside the scope of a standard full-coverage policy. You might consider adding these additional coverages to your policy.
Gap insurance: If your car gets totaled or stolen, gap insurance covers the difference between what you owe on your vehicle and its current market value.
Rental reimbursement: If your car is in the shop after an accident, rental reimbursement covers the cost of renting a vehicle so you’re not left without transportation while your vehicle is repaired.
Roadside assistance: This typically covers towing, tire changes, jump-starts, lockout service, and fuel delivery if you find yourself stranded on the road.
Diminishing deductible: Diminishing or vanishing deductible programs reward you for safe driving. With each year of accident-free driving, your deductible decreases (or may even go away entirely).
New car replacement: If your new car is totaled, new car replacement coverage helps you replace it with a brand-new car of the same make and model. It’s an upgrade from the standard coverage, which typically pays only the depreciated value of your car.
How Much Does Full-Coverage Car Insurance Cost?
The average monthly premium for full-coverage car insurance is $271, according to Compare.com data. However, your rates may vary depending on your location, age, driving record, and other factors.
The table below shows the average car insurance rates for full-coverage insurance from the 10 largest insurance companies by market share, according to the National Association of Insurance Commissioners (NAIC).
Company | Average Full-Coverage Premium |
|---|---|
| USAA | $84 |
| GEICO | $97 |
| State Farm | $112 |
| American Family | $125 |
| Progressive | $146 |
| Nationwide | $158 |
| Liberty Mutual | $164 |
| Travelers | $171 |
| Farmers | $204 |
| Allstate | $223 |
Average premiums can vary significantly from company to company. For example, the average premiums from Travelers, Farmers, and Allstate are more than double that of USAA. This can be due to a variety of factors, such as each company’s pricing criteria, the cost of doing business, and the range of discounts they offer.
This highlights why shopping around and comparing rates from different companies is so important.
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How to Get Cheap Full-Coverage Insurance
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If you’re worried that full-coverage car insurance is outside your budget, here are a few strategies for lowering your premiums while still getting the coverage you need.
Bundle your policies: Many insurance companies offer discounts if you bundle your car insurance with other policies, such as homeowners or renters insurance.
Increase your deductible: Opting for a higher deductible can lower your premium.
Maintain a clean driving record: Safe driving can lead to lower rates because many insurance companies offer discounts for drivers without accidents or traffic violations on their records.
Ask about discounts: Insurance companies may offer various discounts, such as for maintaining good grades, installing anti-theft devices on your car, or taking a defensive driving course.
Shop around: Prices and policies vary significantly between insurance companies. Take the time to get quotes from multiple companies and compare them.
Do You Need a Full-Coverage Auto Policy?
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State law doesn’t require drivers to have full coverage, but there are a few situations where having full coverage can be beneficial. Below are a few examples
You have a new or expensive vehicle. Full coverage can protect your investment if your car is new or has a high market value. Your insurance will help cover the repair or replacement cost if it’s damaged, totaled, or stolen.
You’re financing or leasing your car. Most lenders and leasing companies require full coverage to protect their investment in your vehicle.
You don’t have significant savings for repairs or replacement. If paying out of pocket for repairing or replacing your car would be challenging, full coverage provides a safety net to prevent a car accident from becoming a financial crisis.
Full-Coverage Car Insurance FAQs
To help you understand your options when shopping for full-coverage car insurance, here are answers to a few frequently asked questions.
What qualifies as a full-coverage policy?
A full-coverage policy combines liability insurance with collision and comprehensive coverages. Collision insurance covers damage to your car from an accident, while comprehensive insurance covers non-collision incidents, like fire, theft, and vandalism.
Do you need full-coverage auto insurance?
Full-coverage auto insurance isn’t a legal requirement. But it might be required by lenders or recommended if you have a new or expensive vehicle and can’t afford significant out-of-pocket expenses for car repairs or replacement.
What’s the difference between full coverage and liability insurance?
Liability insurance covers only the damages and injuries you cause to others in an accident. Full coverage includes liability insurance and adds collision and comprehensive coverage, which protect your vehicle from damage due to accidents, theft, falling tree limbs, hail damage, and more.
Should you have full coverage on a car you paid off?
Whether you get full coverage on a paid-off car depends on the car’s value, your financial situation, and your risk tolerance. If your car still has significant value or if you wouldn’t be able to afford major repairs or replace it, maintaining full coverage is a smart move.
How long should you keep full coverage on a car?
The decision to keep full coverage on a car depends on factors like your car’s age and value and your ability to pay for repairs or to replace your vehicle. Generally, as a car ages and its value decreases, you might consider eliminating full coverage.
Sources
Insurance Information Institute, “What is covered by a basic auto insurance policy?,” accessed January 3, 2024.
Insurance Information Institute, “Auto insurance basics—understanding your coverage,” accessed January 3, 2024.
Insurance Information Institute, “Nine ways to lower your auto insurance costs,” accessed January 3, 2024.
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Janet Berry-JohnsonPersonal Finance Writer
Janet Berry-Johnson, CPA, is a freelance writer with a background in accounting and income tax planning and preparation. She's been writing for Compare.com since 2023 and has also appeared on various business and finance sites, including LendingTree, Chime, Insurify, Forbes, and WSJ. She’s passionate about making complicated financial topics accessible to readers.
Lequita WestbrooksSenior Editor
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
Amanda Clear is a licensed Property and Casualty insurance agent who runs her family insurance agency providing coverage in the states of Connecticut, New York, and Vermont. She specializes in providing customized insurance packages to her clients that provide the best coverage for the price that they can afford. She holds a bachelor's degree in English from Sacred Heart University in Fairfield, CT, and works as a freelance editor, proofreader, and writer outside of her insurance career.
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