What is full coverage car insurance?

What does full coverage car insurance cover?

Full coverage car insurance includes a collection of coverages in one policy to protect you in different situations you might face on the road.

Rob Bhatt, an insurance expert at LendingTree, explains that a full coverage policy usually includes the following components:

• Liability coverage: Pays for injuries or damage you cause to others in an accident
• Collision coverage: Reimburses you for car repairs if you collide with other vehicles or objects
• Comprehensive coverage: Handles non-accident damage from theft, vandalism, extreme weather and unforeseen events, such as a rock hitting your windshield

Collision and comprehensive coverage pay for repairs up to your car’s market value, minus your deductible. For example, if a fallen tree causes $3,000 in damage and you have a $1,000 deductible, your insurance would pay $2,000. But if the repairs only cost $900, you’d cover them out-of-pocket.

Like other insurance policies, some exclusions apply:

Delivery drivers should find out what their company covers and look for gaps in coverage.

• Accidents that happen during criminal or illegal activities
• Business use of a personal vehicle
• Damage from racing or speed contests
• Intentional damage to your vehicle
• Personal items stolen from your car
• Rideshare or food delivery activities without special endorsements
• Unapproved custom equipment or modifications
• Your and your passengers’ medical expenses (unless you buy personal injury protection coverage)

Full coverage vs. liability

The key difference between full coverage and liability insurance lies in who and what gets protected. “Liability only covers other people’s expenses for car repairs and medical treatment,” explained Bhatt. Full coverage protects both parties — and can include medical payment coverage (e.g., MedPay) for injuries.

Most states require liability insurance because it pays for damage you cause to others in an accident. This includes repairs to their vehicle or property, such as light posts, plus medical bills. But if your car suffers damage, you’re on your own with repair costs.

Full coverage fills these protection gaps. If your car gets stolen or hit while parked, it pays for repairs or replacement. It also provides practical advantages in accident situations, according to Bhatt.

For example, insurance companies may take months to sort through responsibility for an accident. “With full coverage, your car insurance company will front some initial costs and collect from the other driver’s insurance company later,” he notes.

How much does full coverage car insurance cost?

Full coverage car insurance costs about $2,400 per year on average, or $200 monthly, according to Maya Afilalo, an insurance industry analyst at AutoInsurance.com. “(It’s) about twice as much as liability-only insurance,” Bhatt points out.

However, your actual rate may vary based on several factors:

• Age: Teens and drivers under 30 typically pay more
• Annual mileage: Less driving usually means lower rates
• Credit score: Better credit often means lower premiums
• Driving history: A clean record gets you more attractive rates
• Location: Premiums vary by state and city
• Vehicle type: Luxury cars generally cost more to insure

Save money on full coverage by choosing a high collision deductible.

You can reduce your full coverage premium in a few ways:

• Compare rates, discounts and offers from at least three different auto insurance providers
• Consider bundling with home or renters insurance
• Join an app-based safe driving program
• Leverage your military status (if applicable) 

Is full coverage car insurance worth it?

Full coverage car insurance is worth it for most drivers. “(It’s a) good idea (to have) even if you own your car outright,” emphasized Afilalo. If you have a car loan or lease, your lender will likely require it. But ultimately, the decision depends on your car’s value and your financial situation.

“If the unexpected loss of your vehicle without insurance protection won’t create a financial hardship, then you (may not) need full coverage,” Bhatt explained. He suggests that cars worth $5,000 or more typically benefit from full coverage, while those worth less than $3,000 rarely do.