Understanding Auto Insurance: What Does Full Coverage Mean?

Full coverage auto insurance is a general term used to describe a policy that includes certain coverages to protect policyholders against various circumstances. While there is no consensus on what full coverage means, it typically refers to carrying both liability and physical damage coverages (comprehensive and collision), in addition to any other coverages mandated by the state. It's important to note that no insurer can offer a policy with 100% coverage in all situations. The cost of full coverage insurance varies based on factors such as the insured's location, driving history, vehicle type, coverage limits, and deductible amount.

Comprehensive coverage

Lenders often require comprehensive coverage if you lease or finance your vehicle. It's a good idea if your car has a high cash value or if you can't afford repairs or replacement out of pocket. However, if your vehicle's value is low and you can afford the deductible, comprehensive coverage may not be worth the cost.

Collision coverage

When it comes to auto insurance, "full coverage" is a general term used to describe a policy that includes a range of coverages to protect against various situations. While there is no consensus on what "full coverage" entails, it typically includes liability coverage, which is mandatory in almost all states, and physical damage coverages, which are optional. Collision coverage is one of the physical damage coverages that can be included in "full coverage" auto insurance.

The cost of collision coverage depends on factors such as the value of the vehicle, the chosen deductible, and the monthly premium. A higher deductible can lead to a lower monthly premium, but it also means the policyholder will have to pay more out of pocket in the event of a claim. Collision coverage is optional in most states, but it provides valuable protection for your vehicle and can save you from costly repair bills in the event of an accident.

While "full coverage" auto insurance provides comprehensive protection, it is important to note that no single policy offers 100% coverage in all situations. The term "full coverage" can be misleading, and it is always a good idea to review your policy carefully to understand the specific coverages included and any exclusions or limitations.

Liability coverage

Liability insurance is designed to safeguard the policyholder from the financial fallout of an accident. It covers the costs of repairing or replacing the other driver's vehicle, as well as any rental vehicles they may need while their car is being fixed. This coverage extends to damage to buildings, fences, and other structures, as well as personal property like electronics or belongings inside the vehicle. Importantly, liability coverage also takes care of legal fees if the policyholder is sued for property damage or bodily injury.

The scope of liability coverage is broad, encompassing various scenarios. For instance, if a driver hits a pedestrian, their liability insurance will cover the medical expenses, rehabilitation, and even potential legal costs of the injured party. This coverage also applies when a driver collides with another vehicle, causing damage to the car and injuries to its occupants. In this case, liability insurance will pay for the repairs to the other driver's car and any necessary medical treatment for the occupants.

While liability coverage is a crucial aspect of auto insurance, it's important to recognize that it does not cover damages to the policyholder's own property or injuries they sustain. To protect oneself in these situations, additional coverages, such as comprehensive and collision insurance, are necessary. Nevertheless, liability coverage forms a fundamental layer of protection, ensuring that drivers can financially support those impacted by their driving errors without facing overwhelming personal financial strain.

Full coverage cost

The cost of full-coverage auto insurance varies depending on factors such as age, location, driving record, vehicle type, and more. The average cost of full coverage auto insurance is $133 per month, with the cheapest rates offered by Travelers ($112/month), USAA ($114/month), and Nationwide ($123/month).

In Texas, the average cost of full coverage auto insurance is $153 per month, with Texas Farm Bureau, State Farm, and USAA offering the cheapest rates, at less than $115 per month.

Full coverage is a generic term for a policy with comprehensive and collision coverage. Comprehensive coverage helps pay for damages caused by events like hail, fire, or theft, while collision coverage helps cover the cost of fixing damage to your car from an accident with another car.

While full coverage is not legally required by states, it is required for drivers of leased or financed vehicles. Additionally, insurance experts recommend purchasing full coverage if your vehicle is worth more than $4,000 or if you plan to resell it in the future.

The cost of full coverage can be up to double the amount of a liability-only policy. However, it is important to note that liability-only policies may not provide sufficient protection in the event of a serious accident.

Is full coverage worth it?

Full-coverage auto insurance is a combination of liability, comprehensive, and collision insurance. It covers damage to your car from a wide range of scenarios, including weather events, accidents, hitting animals, and vandalism. It also covers injuries and property damage caused to others in an accident you caused.

Full coverage is generally recommended if you can afford it, especially if you have a new car, live in a place with extreme weather, or have an auto loan or lease. It offers extra financial protection, ensuring you won't be stuck paying for costly repairs to your car.

However, full coverage may not be worth it if you drive an older vehicle. Comprehensive and collision insurance will only reimburse you up to the car's value at the time of damage or theft, and these coverages usually come with a deductible. If your deductible is more than your car's value, or if your insurance premium is a significant percentage of your car's value, then liability-only insurance may be a more cost-effective option.

Ultimately, the decision to get full coverage depends on your financial situation, the age and value of your car, and your desire for peace of mind and financial protection.

Frequently asked questions