What Full Coverage Car Insurance Actually Includes

Full coverage means collision and comprehensive insurance, plus your state's required liability limits

Full coverage is not a single product — it is a combination of three types of insurance working together. Your state requires you to carry liability insurance, which pays for damage you cause to someone else's car or property. On top of that, full coverage adds collision insurance, which pays to repair or replace your own car after an accident, and comprehensive insurance, which covers theft, weather, vandalism, and other non-collision damage. Most lenders require full coverage if you are financing or leasing a vehicle.

When you buy a policy, you will see these three types listed separately on your declarations page. You choose limits for liability (your state sets a minimum), and you choose deductibles for collision and comprehensive. Together, they form what the insurance industry calls full coverage — though the term itself is not official, and different companies may use it slightly differently.

Key Takeaways

• Full coverage combines liability (required by law), collision (covers accidents you cause), and comprehensive (covers theft, weather, and vandalism).
• Liability limits vary by state, but most states require a minimum of 25/50/25 or 15/30/5, meaning $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for property damage.
• Collision and comprehensive coverage each have a deductible you choose — typically $500 or $1,000 — which is what you pay out of pocket when you file a claim.
• If you own your car outright and it is older, you may decide the cost of collision and comprehensive is not worth the protection, but lenders will not allow this choice.
• Full coverage does not include uninsured motorist protection or medical payments coverage, which are separate add-ons available in most states.

What liability insurance covers and what it does not

Liability insurance is the foundation of any car insurance policy and is legally required in every state except New Hampshire and Virginia. It has two parts: bodily injury liability, which pays medical bills and lost wages if you injure someone in an accident, and property damage liability, which pays to repair or replace their vehicle or other property. Your state sets a minimum amount you must carry. Most states require 25/50/25 (meaning $25,000 per person, $50,000 per accident for bodily injury, and $25,000 for property damage), though some require 15/30/5 or higher.

Liability does not cover damage to your own car, your own medical bills, or damage caused by an uninsured driver hitting you. It also does not cover intentional damage or damage from wear and tear. If you cause an accident and the other person's damages exceed your liability limit, you can be sued for the difference, which is why many people choose limits higher than their state's minimum. When you file a liability claim, the insurance company investigates the accident and decides whether you are responsible before paying the other person.

How collision insurance works

Collision insurance pays to repair or replace your car after you hit another vehicle, a tree, a guardrail, or any other object. It covers accidents you cause and accidents caused by someone else, as long as there is physical contact. You choose a deductible when you buy the policy — usually $500, $750, or $1,000 — and that is the amount you pay toward repairs. If your repair bill is $3,500 and your deductible is $500, your insurance pays $3,000.

Collision does not cover damage from weather, theft, or vandalism — that is what comprehensive is for. It also does not cover mechanical failure or wear and tear. If your car is totaled (meaning the cost to repair it exceeds 70 to 80 percent of its value, depending on your state), the insurance company pays you the actual cash value of the car minus your deductible. If you still owe money on a loan, the payout goes to the lender first. You will need to provide the insurance company with repair estimates or a police report if the accident involves a hit-and-run.

What comprehensive insurance covers

Comprehensive insurance covers damage to your car from causes other than collision: theft, vandalism, weather (hail, flooding, wind), falling objects, animal strikes, and fire. Like collision, you choose your deductible. Comprehensive typically costs less than collision because these claims happen less often than accidents.

Comprehensive does not cover mechanical failure, maintenance, or damage from normal wear. It also does not cover damage you cause intentionally or damage from racing or off-road driving. If your windshield is damaged, some policies cover glass repair or replacement with a lower deductible or no deductible at all — check your policy documents to see if this applies to you. You will need to file a police report if your car is stolen before the insurance company will pay a comprehensive claim.

The difference between full coverage and state minimum coverage

State minimum coverage means you carry only liability insurance — the amount your state requires by law. This is the cheapest option and is legal if you own your car outright. However, if you hit someone and cause serious injury or property damage, you could be sued for amounts far beyond your liability limit, and your wages or assets could be garnished to pay the judgment.

Full coverage adds collision and comprehensive, which means your own car is protected in most situations. If you finance or lease a vehicle, your lender will require full coverage as a condition of the loan. If you own your car outright, you can choose state minimum, but you bear the full cost of any accident or theft yourself. The trade-off is that collision and comprehensive have deductibles and monthly premiums, so you are paying something every month whether or not you have a claim.

Deductibles and how they affect your premium

Your deductible is the amount you agree to pay out of pocket when you file a collision or comprehensive claim. A higher deductible (like $1,000) means a lower monthly premium, because you are taking on more of the risk yourself. A lower deductible (like $500) means a higher monthly premium, because the insurance company is taking on more of the risk.

Choosing the right deductible depends on how much you can afford to pay if you have an accident. If you have $1,000 in savings and can afford to replace it, a $1,000 deductible might make sense. If you have less savings or would struggle to pay that amount, a $500 deductible is safer, even if the premium is higher. Remember that you pay the deductible for each claim, so if you have two accidents in one year, you pay the deductible twice. You can change your deductible when you renew your policy or sometimes in the middle of your policy term.

What full coverage does not include

Full coverage does not automatically include uninsured motorist protection, which covers you if you are hit by a driver who has no insurance or leaves the scene. It also does not include underinsured motorist protection, which covers you if the other driver's liability limit is too low to pay for your damages. These are separate add-ons you can purchase in most states, and they are worth considering if you live in an area with high rates of uninsured driving.

Full coverage also does not include medical payments coverage (sometimes called MedPay), which pays your medical bills and your passengers' medical bills regardless of who caused the accident. It does not cover rental car reimbursement if your car is in the shop, roadside information, or gap insurance (which covers the difference between what you owe on a loan and what the car is worth if it is totaled). All of these are optional add-ons that you can purchase separately, and your insurance agent can explain which ones might be useful for your situation.

When you can drop collision or comprehensive

If you own your car outright and it is older, the cost of collision and comprehensive may exceed the value of the car itself. For example, if your car is worth $4,000 and collision costs $600 a year, you are paying 15 percent of the car's value annually just for that coverage. In this situation, some people choose to drop collision and comprehensive and keep only liability, accepting the risk that they will pay for repairs themselves.

However, if you finance or lease your car, your lender will not allow you to drop these coverages — they are a condition of the loan. You must keep full coverage until the loan is paid off. Once you own the car outright, the choice is yours. Many insurance companies can show you what your car is worth and what collision and comprehensive would cost, so you can make an informed decision about whether the protection is worth the price. Some people keep comprehensive but drop collision on older cars, since comprehensive is cheaper and covers theft and weather damage.

Frequently Asked Questions

Does full coverage pay for my medical bills if I am injured in an accident?

Full coverage does not automatically include medical payments coverage. Liability covers the other person's medical bills if you cause an accident, but not yours. You can add medical payments coverage (MedPay) as an optional add-on, which pays your medical bills and your passengers' bills regardless of who caused the accident.

What happens if I have an accident and my car is worth less than the repair bill?

If the cost to repair your car is more than 70 to 80 percent of its actual cash value (the percentage varies by state), the insurance company will declare it a total loss. They will pay you the actual cash value of the car minus your deductible, not the repair cost. If you owe more on a loan than the car is worth, gap insurance can cover the difference.

Can I lower my premium by raising my deductible?

Yes. Raising your deductible from $500 to $1,000 will lower your monthly premium because you are agreeing to pay more out of pocket if you have a claim. The savings vary by insurance company and your location, but it is often $10 to $30 per month. Make sure you can actually afford to pay the higher deductible before you choose it.

Do I need full coverage if I park my car in a garage and rarely drive?

Liability is always required by law (except in New Hampshire and Virginia). Whether you need collision and comprehensive depends on your lender's requirements and your own risk tolerance. If you own the car outright and it is parked most of the time, you might choose to drop collision but keep comprehensive to cover theft and weather damage.

What is the difference between full coverage and comprehensive coverage?

Comprehensive is one part of full coverage. Full coverage means liability (required by law) plus collision (covers accidents) plus comprehensive (covers theft, weather, and vandalism). Comprehensive alone would not cover accidents, so it is not enough protection if you are financing a car.