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Each state has its own minimum car insurance requirements, but upping your coverage will offer better protection. Full coverage car insurance is a general term that means your policy includes liability, comprehensive and collision insurance. You might choose to tack on other extras to make your policy even more robust. But full coverage car insurance also has drawbacks to consider. Let's unpack how it works, what it covers and whether or not you need it.
What Does Full Coverage Car Insurance Cover?
Insurers generally don't offer a "full coverage" insurance option. Instead, drivers build it themselves by adding different types of coverage to their policy. A full coverage policy typically includes to following:
- Liability coverage: Covers the cost of injuries to others if you cause an accident. Most states require a minimum amount of liability insurance.
- Comprehensive coverage: Covers damage to your car that isn't caused by an accident. That usually includes weather events, vandalism and theft.
- Collision coverage: Pays to replace or repair your car after a collision you caused.
Learn More >> Liability vs. Full Coverage Car Insurance: Which Is Better?
Extra Coverage You Can Add to Your Policy
Beyond that, you might choose to add extra coverage to lock in more protection. Here's a quick breakdown of coverage many auto insurance issuers offer.
| Coverage Type | What It Covers |
|---|---|
| Uninsured/underinsured motorist coverage | Protects you if you or your passengers are injured in an accident caused by an uninsured or underinsured driver. Damage to your car is also covered. |
| Personal injury protection (PIP) coverage | PIP covers accident-related medical expenses for you and your passengers, regardless of who's at fault. Some policies also cover additional costs, such as lost wages. |
| Roadside assistance | If you're stranded, roadside assistance can help with lockouts, towing and more. |
| Rental car reimbursement | This can come in handy if your car is in the shop and you have to lay out money for a rental car. |
| Gap coverage | If your vehicle is totaled, gap insurance covers the difference between your car's value and your outstanding car loan (or what you owe your lessor if you're leasing). |
| Car repair insurance | This covers things like transmission problems, engine issues or problems related to electrical systems, but you must meet certain conditions stated in your policy to receive coverage. |
Note that some states may have their own laws for which of these extra coverage types you're required to carry. For example, if you live in a no-fault state, you'll be required to purchase PIP coverage.
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Pros and Cons of Full Coverage Car Insurance
Learn about the benefits and drawbacks of full coverage auto insurance when deciding whether it's right for you.
Pros
- You're better protected. Full coverage car insurance offers more robust protection, which can provide peace of mind. It can also reduce out-of-pocket costs if you experience a covered event.
- It may cover medical expenses. If you opt for personal injury protection coverage—and you or your passengers are hurt in an accident—your policy should cover medical bills. That could be a game changer if someone is seriously injured.
- It's convenient. Adding perks like roadside assistance or rental car reimbursement can make life easier if you run into unexpected car trouble. It can also reduce your financial responsibility if your car breaks down.
Cons
- It's more expensive. Adding additional coverage will increase your insurance premium. The amount you pay will depend on your level of coverage and factors like your insurer, your age, your driving history and the type of car you drive. AAA reports that on average, full coverage car insurance costs $1,765 per year.
- You may not need it. Tacking on extra coverage can be pricey—and you may end up never using it all. Like all insurance policies, you'll need to consider how the benefits and costs fit into your budget.
- It won't cover everything. Even with full coverage car insurance, some situations may not be covered. For example, car repair insurance does not cover normal wear and tear or problems related to non-mechanical or non-electrical parts.
Do I Need Full Coverage Car Insurance?
Each state in the U.S. has different car insurance requirements and laws, but almost all states require liability coverage. According to the Insurance Information Institute, 80% of all drivers have comprehensive coverage and 76% have collision coverage.
Consider your current situation when deciding whether getting full coverage is right for you:
If You're Leasing
If you lease a car, the lessor will likely require you to have an insurance policy that includes comprehensive and collision insurance on top of your state's minimum requirements. Many also require gap protection and higher liability limits.
If You Have an Auto Loan
If you finance a car with an auto loan, your lender will likely require full coverage car insurance. That generally includes comprehensive and collision coverage on top of liability insurance.
If You Own Your Car Outright
You technically only need coverage that's required by your state. This can vary, but most states have a minimum requirement for liability coverage. Depending on where you live, that could be as low as $10,000 per person and $20,000 per accident for bodily injuries, and $10,000 for property damage. This is known as 10/20/10 liability coverage. However, most experts recommend carrying at least 100/300/100.
Learn more >> How Much Car Insurance Do I Need?
Frequently Asked Questions
Adding extra coverage to your car insurance policy will increase your premium. As noted above, the average cost of full coverage auto insurance is $1,765, according to AAA.
The amount you ultimately pay will depend on:
- Your level of coverage
- Your insurer
- Your age
- Your driving history
- The type of car you drive
- Where you live
You can get a full coverage car insurance policy by adding extra coverage that goes beyond your state's minimum requirements. That generally includes comprehensive insurance, liability insurance and collision coverage. You could add other extras that increase your coverage even more. However, full coverage car insurance doesn't cover everything—and it's more expensive.
Here are some of the best ways to save money on car insurance:
- Maintain a safe driving record.
- Shop around with different insurers to find the best price.
- Take advantage of discounts. Many insurers offer lower prices to students, veterans, active service members, seniors and safe drivers.
- Consider bundling your home and auto insurance policies.
- Opt for a higher deductible, which should reduce your premium. (Just keep in mind that you'll face higher out-of-pocket costs if you file a claim for a covered event.)
- Improve your credit score. Some states consider credit-based insurance scores when setting insurance rates. That means maintaining healthy credit could reduce your premium.
Carrying collision and comprehensive coverage can be helpful if you have a newer car that would be costly to repair. (Again, most lessors and auto loan lenders will require it.) But if you have an older car that isn't worth as much, or have a high deductible, full coverage car insurance may not be your best option.
The Bottom Line
Full coverage car insurance offers better protection and more comprehensive coverage. That could be useful if you experience a covered event and need to file a claim, but you'll likely pay more in premiums. Whether it's right for you will depend on your risk tolerance and financial situation. Shopping around and comparing car insurance quotes with Experian can help you find the right policy.