What Full Car Insurance Coverage Includes and What It Doesn't

Full coverage means comprehensive and collision insurance added to your state's required liability

Full coverage is not an official insurance term — it is what people call the combination of liability insurance (required by your state), comprehensive coverage, and collision coverage. Liability pays for damage you cause to someone else's car or property. Comprehensive covers damage to your own car from events you did not cause: theft, weather, vandalism, hitting an animal. Collision covers damage to your own car when you hit another vehicle or object.

The word "full" is misleading because this combination does not cover everything. It does not cover your medical bills, your lost wages, damage to your belongings inside the car, or the cost of a rental car while yours is being repaired. Those are separate add-ons called medical payments coverage, uninsured motorist coverage, and rental reimbursement. What "full coverage" does mean is that your own car is protected in most common accident scenarios, not just accidents where you are at fault.

Key Takeaways

• Full coverage combines liability (required by law), comprehensive (theft, weather, vandalism), and collision (accidents you cause or are involved in).
• Comprehensive and collision each have a deductible — usually $500 or $1,000 — that you pay out of pocket before insurance pays anything.
• Full coverage does not include medical payments, rental car costs, or uninsured motorist protection, which are purchased separately.
• Lenders and lease companies require full coverage as a condition of the loan or lease agreement.

What liability insurance covers and why it is required

Liability insurance is the foundation of any car insurance policy and is required in every state except New Hampshire. It has two parts: bodily injury liability and property damage liability. Bodily injury pays for medical bills, lost wages, and pain and suffering for people you injure in an accident. Property damage pays for damage to someone else's vehicle, fence, building, or other property.

Your state sets a minimum amount you must carry. In most states this is $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 for property damage — written as 25/50/25. Some states require higher minimums. You can buy more than the minimum, and many people do because a serious accident can cost far more than the state minimum. If you cause an accident that exceeds your liability limit, you can be sued for the difference.

How comprehensive coverage works and what it pays for

Comprehensive coverage pays for damage to your car that is not caused by a collision. This includes theft, vandalism, weather damage (hail, flooding, wind), hitting an animal, falling objects, and fire. If a tree branch falls on your parked car, comprehensive pays for the repair. If your car is stolen, comprehensive pays the actual cash value of the vehicle. If a deer runs into your car, comprehensive covers it — hitting an animal is not considered a collision.

Comprehensive has a deductible, which is the amount you pay toward the repair before insurance pays the rest. Common deductibles are $250, $500, or $1,000. If you have a $500 deductible and a hail storm damages your car for $3,000, you pay $500 and insurance pays $2,500. If the damage is less than your deductible, you pay the full amount and insurance pays nothing. You choose your deductible when you buy the policy — a higher deductible lowers your monthly premium, and a lower deductible raises it.

How collision coverage works and what it pays for

Collision coverage pays for damage to your car when you hit another vehicle, a stationary object, or a pothole. It covers accidents whether you are at fault or not. If you rear-end another car, collision pays for your repairs. If another driver hits you and their insurance denies the claim, your collision coverage pays for your repairs. If you hit a guardrail or a mailbox, collision covers it.

Collision also has a deductible, usually $500 or $1,000, that works the same way as comprehensive. You pay the deductible, and insurance pays the rest up to the actual cash value of your car. If your car is worth $8,000 and collision damage totals $10,000, insurance pays $9,000 (the car's value minus your deductible) and the car is declared a total loss. You do not get paid for the difference. Collision does not cover wear and tear, mechanical failure, or damage from an accident you did not report to police.

What full coverage does not include

Full coverage leaves several gaps. Medical payments coverage (also called med pay) pays your medical bills and those of your passengers after an accident, regardless of who is at fault. It covers hospital visits, surgery, dental work, and funeral expenses. Without it, you rely on your health insurance or the other driver's liability insurance to cover medical costs. Uninsured motorist coverage protects you if you are hit by a driver with no insurance or by a hit-and-run driver. Without it, you have to sue the other driver to recover costs, which is often impossible if they have no assets.

Rental reimbursement pays for a rental car while yours is being repaired after a covered accident. Without it, you pay out of pocket for a rental or go without a car. Roadside information covers towing, lockouts, jump-starts, and fuel delivery. Gap insurance covers the difference between what you owe on a car loan and what the car is worth if it is totaled — relevant only if you are financing or leasing. None of these are included in "full coverage" and must be added separately if you want them.

Deductibles and how they affect your premium

Your deductible is the most direct way to control your insurance cost. A higher deductible means you pay more out of pocket if you have a claim, but your monthly premium is lower. A lower deductible means you pay less out of pocket per claim, but your monthly premium is higher. The trade-off depends on how much you can afford to pay if an accident happens and how often you think you might file a claim.

If you have an older car worth $5,000 or less, a high deductible ($1,000) might make sense because the repair cost is unlikely to exceed the car's value anyway. If you have a newer car worth $25,000 or more, a lower deductible ($500) might make sense because you want to protect your investment. If you have a clean driving record and have not filed a claim in years, a higher deductible can save you money. If you live in an area with frequent hail or theft, a lower deductible might be worth the higher premium.

When lenders and lease companies require full coverage

If you are financing a car through a loan, the lender almost always requires you to carry comprehensive and collision coverage as a condition of the loan. This protects the lender's investment in the vehicle. If you let this coverage lapse, the lender can purchase it on your behalf and add the cost to your loan payment — a practice called force-placed insurance, which is usually more expensive than buying it yourself. Lease companies have the same requirement because they own the car and want to may support it is protected.

If you own your car outright with no loan, you are not required by law to carry comprehensive and collision — only liability. However, if you still owe money on the car, you must maintain full coverage or risk default on the loan. Once you pay off the loan, you can drop comprehensive and collision if you choose, though many people keep them for protection against theft or major accidents.

Frequently Asked Questions

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

No. Full coverage (liability, comprehensive, and collision) pays for damage to vehicles and property, not medical bills. You need medical payments coverage or personal injury protection to cover your own medical costs. Your health insurance may also cover accident-related injuries, but there may be a deductible or copay.

What happens if I hit someone and the damage exceeds my liability limit?

You are responsible for the amount over your limit. The other person can sue you personally to recover the difference. This is why many people buy liability limits higher than their state's minimum — a $100,000 limit costs only slightly more than a $25,000 limit but protects you from a lawsuit.

Can I use comprehensive or collision if I cause an accident?

Yes. Collision covers accidents whether you are at fault or not. Comprehensive covers damage from events like theft or weather, which are never your fault. Your liability insurance pays the other person's costs; your comprehensive or collision pays for your own car's damage.

If my car is totaled, do I get the full value or just what I owe on my loan?

You get the actual cash value of the car as determined by the insurance company, minus your deductible. If you owe more on the loan than the car is worth, the difference is your responsibility — this is where gap insurance comes in, but it is not part of full coverage and must be purchased separately.

Do I need full coverage if my car is old and worth very little?

That depends on whether you can afford to replace it. If your car is worth $3,000 and you have $3,000 in savings, dropping comprehensive and collision saves you money monthly and you can replace the car if it is damaged. If you cannot afford to replace it, keeping full coverage protects you even though the monthly cost adds up over time.