Understanding Your Auto Insurance: Am I Fully Covered?

Full coverage auto insurance is a combination of comprehensive, collision, and liability insurance. It provides coverage for most scenarios, including damage to your car from weather, an at-fault accident, hitting an animal, or vandalism. While there is no standard definition of full coverage, it typically includes liability insurance, which covers damages or injuries you cause to another vehicle or person, and comprehensive and collision insurance, which covers damage to your own vehicle. To know if your auto insurance is full coverage, review your policy or contact your insurance company or agent to confirm the coverages you have.

Full coverage insurance explained

Full coverage auto insurance is a combination of liability, comprehensive, and collision insurance. This type of insurance is not a one-size-fits-all purchase and can be customized to fit your needs. While there is no consensus on what constitutes "full coverage," it typically includes liability coverage for bodily injury and property damage, as well as comprehensive and collision coverage for damage to your vehicle.

Liability insurance covers the medical bills and property damage of others in an accident you cause. Comprehensive insurance covers damage to your vehicle from events outside your control, such as natural disasters, theft, or vandalism. Collision insurance covers damage to your vehicle in an accident, regardless of fault.

Full coverage insurance can be beneficial if you have a new or expensive car, commute in heavy traffic, live in an area with extreme weather or high crime rates, or cannot afford to repair or replace your car if it is damaged or stolen. However, it may not be necessary if you drive an older vehicle, as comprehensive and collision coverage reimbursements are limited to the vehicle's value at the time of the incident.

The cost of full coverage insurance varies depending on factors such as age, location, and driving record. On average, it is about three times the price of minimum-required liability insurance. To save on full coverage, consider shopping around, looking for discounts, increasing your deductible, maintaining a good driving record, and improving your credit score.

When is full coverage auto insurance required?

There is no standard definition of "full coverage" auto insurance, and it can vary depending on your state and insurance company. However, it typically includes liability coverage, which is mandatory in almost all states, as well as comprehensive and collision coverage, which are optional but may be required by your lender or lease company.

If you are financing or leasing a vehicle, your lender or lease company may require you to carry comprehensive and collision coverage, also known as physical damage coverage, to protect their investment. This means that they can have their own rules about the coverages they require, in addition to what is mandated by your state.

In addition to comprehensive and collision coverage, full coverage auto insurance may also include other types of coverage such as uninsured/underinsured motorist coverage, personal injury protection, and medical payments coverage, depending on your state's requirements.

It's important to note that no insurer can sell a policy that covers you 100% in all situations. Therefore, it's recommended that you review your policy carefully and consult with your insurance company or agent to ensure that you have the right coverages for your specific needs.

What does full coverage auto insurance cover?

While there is no universally accepted definition of "full coverage" auto insurance, it typically includes liability, comprehensive, and collision coverage. This combination of coverages can provide financial protection if you're in an accident or if your vehicle is damaged in other incidents, such as vandalism or extreme weather.

Liability coverage offers financial protection if you're at fault for an accident. It generally includes bodily injury liability coverage and property damage liability coverage. This means that if you're found to be at fault for an accident, liability coverage will pay for the damages you cause to others, up to your policy's limits. Liability coverage is mandatory in almost all states.

Collision coverage will pay for damages to your car that result from colliding with another object, such as a vehicle, tree, or retaining wall. It covers your vehicle if you're at fault or not.

Comprehensive coverage pays for vehicle damages resulting from incidents other than collisions. This includes falling objects, hitting a deer, fire, and vandalism. It also covers damage due to theft, wind, hail, or flooding.

In addition to the above, full coverage auto insurance may also include other types of coverage, especially if required by state law. This can include medical payments (MedPay), personal injury protection (PIP), uninsured/underinsured motorist coverage, gap insurance, rental reimbursement insurance, and roadside assistance coverage.

It's important to note that full coverage auto insurance does not exist as a standalone policy. Instead, it is a combination of different types of insurance coverages that provide more protection than the minimum coverage required by your state.

What isn't included in full coverage auto insurance?

While "full coverage" auto insurance provides peace of mind for many situations, it does not cover everything. There is no standard definition of "full coverage" car insurance, and no policy can be purchased by this term alone.

Full coverage auto insurance typically includes liability, collision, and comprehensive coverage. However, it is important to note that full coverage does not include certain things, such as:

• Damage due to wear and tear: You will have to pay for this damage out of pocket.
• Rental car reimbursement: This covers the cost of a rental car while your vehicle is being repaired after an accident.
• Roadside assistance or towing: This covers the cost of services such as gas delivery, locksmith services, and flat tire changes.
• New car replacement: This ensures that if your new car is totaled within the first year, you can replace it with one of the same value, without worrying about depreciation impacting your settlement.

Additionally, full coverage auto insurance does not include guaranteed auto protection (GAP) insurance, which covers the difference between what you owe on a leased or financed vehicle and its worth if it is totaled. Some lenders or insurers require full coverage to qualify for GAP insurance.

It is also important to note that full coverage auto insurance does not include personal injury protection (PIP) in all states. PIP coverage helps pay your medical bills, funeral expenses, and economic losses from lost work or needing help around the house, regardless of who is at fault. While some states require this coverage, others only require insurers to offer it, allowing policyholders to decline it.

How to save on full coverage auto insurance

While there is no consensus on what "full coverage" means, it typically includes liability and physical damage coverages (comprehensive and collision), as well as any other coverages mandated by your state. Comprehensive coverage pays for damage to your vehicle caused by something other than a collision, such as theft, vandalism, or extreme weather. Collision coverage, on the other hand, covers damage to your vehicle resulting from a collision with another vehicle or object, regardless of fault.

Full coverage auto insurance can be expensive, but there are ways to save money on your policy:

• Take advantage of discounts: Many insurers offer discounts for various reasons. For example, you may be eligible for bundling discounts if you purchase multiple types of insurance (e.g., auto and homeowners) from the same company. Safety discounts are also common, rewarding proven safe drivers or those who complete a defensive driving course. Students with good grades or no car on campus may also qualify for lower rates. Additionally, some companies offer discounted rates to members of certain professional or alumni organizations.
• Remove unnecessary coverage: Evaluate your policy to ensure you only pay for the coverage you need. For instance, if you have another service that offers roadside assistance, you can remove this from your car insurance policy. Similarly, if you have a new car, you may not need roadside assistance coverage as it is often included in the manufacturer's warranty.
• Choose a higher deductible: Opting for a higher deductible for collision and comprehensive insurance can significantly reduce your premium. However, this also means you'll have to pay more out of pocket if an accident occurs.
• Improve your credit score: In most states, insurers use credit-based insurance scores to price premiums. Therefore, improving your credit score can lead to lower insurance rates.
• Review your policy regularly: It's a good idea to review your policy annually or whenever it's up for renewal to ensure it still meets your needs and to take advantage of any new discounts you may be eligible for.
• Compare insurance quotes: Shopping around for insurance quotes from multiple companies is a great way to find lower rates. By comparing quotes, you can identify which insurer offers the best rate for your desired coverage.
• Consider pay-per-mile insurance: If you don't drive often, pay-per-mile insurance can be a more cost-effective option. This type of insurance bases your premium on how much you drive, resulting in lower rates for low-mileage drivers.

Frequently asked questions