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 policy type — it is a combination of three separate protections. 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 (pays for damage to your car when you hit something) and comprehensive insurance (pays for damage from theft, weather, vandalism, or animals). Most lenders require this combination if you have a loan or lease on the vehicle.

The exact dollar amounts vary by state and by your lender's requirements. Your liability limits might be $25,000 per person and $50,000 per accident in one state, $30,000 and $60,000 in another. Collision and comprehensive each come with a deductible — the amount you pay out of pocket before insurance kicks in — typically $500 or $1,000, though you can choose lower or higher amounts to adjust your premium.

Key Takeaways

• Full coverage requires liability insurance (which your state mandates), plus collision and comprehensive coverage to protect your own vehicle.
• Liability pays for damage you cause to others; collision pays for damage to your car from crashes; comprehensive covers theft, weather, and vandalism.
• Each collision and comprehensive claim involves a deductible you pay first, with common amounts being $500 or $1,000.
• If you have a car loan or lease, your lender will require collision and comprehensive as a condition of financing.

Liability insurance: the part your state requires

Every state requires you to carry liability insurance before you can legally drive. This coverage pays for injuries or property damage you cause to someone else in an at-fault accident. If you hit another car and injure the driver, your liability insurance pays their medical bills, lost wages, and pain-and-suffering claims up to your policy limit. If you damage their vehicle, it covers repair or replacement costs.

Your state sets a minimum liability limit you must carry. Most states require at least $25,000 per person injured and $50,000 per accident, but some require higher amounts. You can purchase more than the minimum — many people carry $100,000 or $300,000 limits for extra protection. Liability has no deductible; the insurance company pays from the first dollar of a covered claim.

Liability does not cover damage to your own vehicle or injuries to you and your passengers. That is where collision and comprehensive come in.

Collision insurance: damage from crashes

Collision insurance pays to repair or replace your car when you hit another vehicle, a pole, a guardrail, or any other object. It covers accidents you cause and accidents caused by someone else, as long as you file a claim. The insurance company will pay the actual cash value of your vehicle minus your deductible.

If your car is worth $15,000 and you have a $1,000 deductible, and a crash causes $8,000 in damage, the insurance company pays $7,000 and you pay $1,000. If the damage is so severe that repair costs exceed the vehicle's value, the insurer declares it a total loss and pays you the cash value minus the deductible.

Collision is optional if you own your car outright, but required if you have a loan or lease. The premium depends on your car's age and value — newer or more expensive cars cost more to insure because they cost more to repair.

Comprehensive insurance: theft, weather, and other damage

Comprehensive insurance covers damage to your car from causes other than collision. This includes theft, vandalism, broken windows, hail, flooding, falling tree branches, hitting an animal, and fire. If someone breaks into your car and steals your stereo, comprehensive pays for it. If a deer runs into your car on the highway, comprehensive covers the damage.

Like collision, comprehensive has a deductible you choose when you buy the policy. If a hailstorm damages your roof and the repair costs $3,500, and you have a $500 deductible, the insurance company pays $3,000 and you pay $500.

Comprehensive is optional if you own your car outright, but required by most lenders if you have a loan or lease. It is usually cheaper than collision because comprehensive claims happen less often than crash claims.

Deductibles: how much you pay before insurance pays

A deductible is the amount you agree to pay toward any collision or comprehensive claim before your insurance company pays the rest. Common deductible amounts are $250, $500, $750, and $1,000. You choose your deductible when you buy the policy, and you can set different deductibles for collision and comprehensive.

A higher deductible lowers your monthly premium because you are taking on more financial risk. A lower deductible raises your premium because the insurance company expects to pay out more often. If you choose a $250 deductible instead of $1,000, you might pay $30 to $50 more per month, but you will pay less out of pocket when you file a claim.

Liability insurance has no deductible. When you file a liability claim, the insurance company pays from the first dollar up to your policy limit.

What full coverage does not include

Full coverage does not cover routine maintenance, wear and tear, or damage from poor upkeep. If your brakes wear out or your engine fails, that is your responsibility. Full coverage also does not cover damage you cause while driving under the influence, or damage from racing or stunt driving — most policies exclude intentional or illegal activity.

Full coverage does not cover medical expenses for you or your passengers. For that, you need medical payments coverage (also called med pay), which is optional in most states and pays hospital bills and lost wages up to a limit you choose, regardless of who caused the accident. Some states offer personal injury protection (PIP) instead, which covers more expenses but is required in no-fault states.

Full coverage also does not cover damage to someone else's property that is not a vehicle — for example, if you crash into a storefront or a fence. That falls under your liability coverage's property damage limit, which is separate from your bodily injury limit.

When your lender requires full coverage

If you have a car loan or lease, your lender will require you to carry collision and comprehensive insurance as long as the loan is outstanding. The lender has a financial interest in the vehicle and wants to protect that investment. Your insurance company will send proof of coverage to the lender, and if your policy lapses, the lender may purchase insurance on your behalf and bill you for it — usually at a much higher cost than you would pay on your own.

Once you pay off your car loan, you can drop collision and comprehensive if you choose. Many people do, especially if the car is older and worth less than the cost of the premiums plus deductibles. Others keep it for peace of mind. The decision depends on your financial situation and how much you could afford to pay out of pocket if your car is damaged or stolen.

Frequently Asked Questions

Does full coverage pay for damage if I hit a deer?

Yes, if you have comprehensive coverage. Hitting an animal is considered a comprehensive claim, not a collision claim, even though you hit something. You pay your comprehensive deductible and the insurance company covers the rest of the repair cost.

What happens if I cause an accident and the other person sues me?

Your liability insurance pays for their medical bills, vehicle repairs, and other damages up to your policy limit. If the damages exceed your limit, you may be responsible for the difference. This is why many people carry higher liability limits than their state's minimum.

Can I lower my premium by raising my deductible?

Yes. Raising your deductible from $500 to $1,000 typically lowers your monthly premium by $15 to $40, depending on your age, driving record, and vehicle. The trade-off is that you pay more out of pocket if you file a claim.

Do I need full coverage if I own my car outright?

No, full coverage is optional if you own your car. You are only required to carry liability insurance. However, if your car is newer or worth a significant amount, many people choose to keep collision and comprehensive to protect against major financial loss from theft or a serious accident.

Does full coverage cover rental cars?

Your full coverage typically does not extend to rental cars. Rental companies require you to purchase their collision damage waiver or provide proof of coverage from your own policy. Check your policy documents or call your insurer before renting to see whether your collision and comprehensive coverage applies to rentals.