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What Is Full Coverage Insurance?

Most people are ecstatic when a lender finally greenlights their financing agreement to lease or buy a brand-new car. These loan contracts come with a few stipulations, such as buying the right kind of insurance to protect your vehicle in case an unforeseen event takes place.

If you're currently financing your car through a lender, they may ask you to buy an insurance policy with full coverage. But what does full coverage mean, and what does it cover?

Do you need a new full coverage car insurance policy to fit your budget? Liability insurance alone will not pay your expenses if you cause an accident. You can use an online insurance comparison tool like SmartFinancial to search for affordable coverages.

You'll get the cheapest full coverage insurance rates if you enter your zip code on this page. Answer a few questions and you'll get auto insurance quotes from car insurance companies in your area.

What Is Full Coverage Auto Insurance?

Insurers, agents, and lenders use the term "full coverage" to describe auto insurance that covers both physical damages and liability in a collision; however, there are no policies specifically named "full coverage," and every company defines it differently.

Insurers, agents, and lenders use the term “full coverage” to describe auto insurance that covers both physical damages and liability in a collision.

Carriers generally use a combination of different endorsements to provide full coverage car insurance.

Full coverage car insurance usually includes bodily injury and property damage liability, comprehensive and collision coverages, along with other optional coverages required in your area.

Although some agents promise full protection, very few policies will protect against every situation that you’ll encounter on the road.

Almost every state mandates liability coverage, while comprehensive and collision (physical damage coverages) are optional. Although some agents promise full protection, very few policies will protect against every situation that you'll encounter on the road. When buying an insurance policy, don't ask your local agent to provide you with full coverage. Instead, ask your agent about coverages that will provide the best protection for your property and money.

Liability Insurance Coverage

Full coverage auto insurance includes liability coverage that meets the state minimums. This coverage will protect you if you're at-fault in an accident. For example, you may get distracted while driving on the road. The traffic light changes, and you accidentally slam into the vehicle in front of you, damaging their rear-end bumper.

Liability coverage will pay any property damages and medical expenses for third-party drivers and their passengers in a collision like this one if you're at fault in an accident. It will also pay for lawsuits others may bring against you and any legal judgments. This coverage only pays up to your policy's limits.

There are two types of liability coverage on car insurance policies:

Bodily injury liability coverage helps drivers to pay for another person's medical expenses when they are in an accident.

Property damage liability coverage provides money for damages that you may cause to another person's vehicle and their belongings in a collision.

Individual states set the minimum liability coverage limits that drivers must purchase. This insurance contains three liability limits:

  • The maximum payment for bodily injuries per person
  • The maximum payable amount for bodily injuries per accident
  • The maximum payable for property damage.

Some policyholders may exceed the state's requirements and purchase full coverage car insurance with higher coverage limits. Additional coverage means you'll pay higher premiums, but you'll receive more protection if you have an accident.

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Comprehensive and Collision Coverage

Accidents are often out of your control. A deer jumps into your lane while you're driving, and you hit it before you can safely stop. In another scenario, a driver slams into your car then flees the scene without waiting for police officers or first responders. Or maybe your car gets stolen or vandalized.

Comprehensive and collision insurance pays for the cost to replace or repair your vehicle after an unexpected event.

Comprehensive and collision insurance pays for the cost to replace or repair your vehicle after an unexpected event. These scenarios can include theft, a broken window, hail damage, or a collision with an animal. Comprehensive insurance kicks in after you meet your deductible. Collision and comprehensive coverage are optional insurance, usually included on full coverage car insurance policies.

Most lenders ask car owners to buy comprehensive and collision coverage if they're leasing a vehicle or making loan payments. This coverage is optional on auto insurance policies if you've paid off your vehicle.

Comprehensive coverage – Some states call this coverage, "other than collision." It helps reimburses any damage caused by out-of-control events. For example, this policy will cover you when your car is stolen, damaged by hail, vandalism or collisions with animals.

Collision insurance – It will compensate you for repair fees and replacement costs for your car if it's damaged or totaled. This policy only covers your automobile. (Property damage liability coverage only pays for the other driver's car damages if you're at fault.)

Collision coverage will also compensate you for car repairs caused when you hit an object, such as a tree, guardrail, phone pole, pothole, garage, mailbox or house. Some policies even pay for damages caused by a hit-and-run accident (including in a parking lot).

You don't have to buy collision and comprehensive coverage if your auto has little cash value, if it's kept in storage or if it's covered by another insurance policy.

Uninsured and Underinsured Motorist Coverage

Some drivers aren't insured, but they're still driving on the road and putting themselves and others in danger. For example, an uninsured driver may barrel through a red light and hit your car head-on at an intersection. Since this person doesn't have any liability insurance, you may have to pay for your medical expenses and car damages out-of-pocket.

Underinsured and uninsured motorist coverage protects you against scenarios when an at-fault driver doesn't have enough coverage or no insurance at all. Many states require these insurance coverages to protect you when you're involved in a crash with an uninsured or underinsured driver. It is often included on full coverage car insurance policies.

Uninsured Motorist Property Damage Coverage (UMPD) – This insurance pays for repairs for your vehicle when an uninsured driver hits it. Some uninsured motorist coverage policies cover damage after a hit-and-run accident.

Uninsured Motorist Bodily Injury (UMBI) – It covers medical bills for you and your passengers when an uninsured motorist hits you.

Two policies can protect you when a driver with insufficient insurance coverage hits you.

Underinsured Motorist Property Damage (UIMPD) – It pays for damages to your vehicle if an underinsured driver hits you.

Underinsured Bodily Injury (UIMBI) – This insurance covers hospital stays and other medical bills you or your passengers may have after a collision with an underinsured driver.

Some states require UMBI and UIMBI coverage. These two policies generally don't have a deductible for medical care. After an accident, your health insurance may overlap with these policies. If these are optional coverage within your state, you should consider several things. Will your health insurance completely cover the injuries you sustain from a car accident? If not, you may need these additional policies. UMBI and UIMBI can also reimburse some lost wages. If you have passengers who don't have health insurance, these policies can protect them too.

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Optional Full Coverage Insurance Coverages

Some states require car owners to purchase additional coverage to protect their vehicles from damages. Consider maximizing your insurance with optional coverages when you buy a brand-new car or add another driver to your policy.

Increasing the limits of your liability and other coverages will protect you if your car suffers excessive damages or is totaled in an accident. Roadside and rental car reimbursement insurance are normally inexpensive and good to have added to your policy.

If your car has a minimal market value (less than $2,000 or $3,000), it may not make sense to have a physical damage coverage policy.

Here are some other full coverage car insurance car options:

  1. Medical Payments and Personal Injury Protection

    Insurance providers will also pay for your doctor's bills or funeral expenses that result from a car accident if you have medical payments or persona injury protection coverage. Some companies extend this coverage to relatives or passengers that were in your vehicle when the accident occurred.

    A few states use personal injury protection (PIP) as a substitute for medical payments coverage. PIP coverage will compensate you for your medical bills and protect you and anyone covered under this policy. Here is a list of events that PIP may pay for, but note that this coverage varies by state:

    • This coverage pays for medical bills for you and those covered in your full coverage insurance policy.

    • It will also cover you when you're hit by a car while you're walking on a road or bike riding.

    • It covers lost wages (if you or your passengers suffer injuries and can't work).

    • This coverage compensates policyholders for disability and rehab costs.

    • It pays death benefits (paid to your family if you're in a fatal car accident).

    In some states, PIP's non-medical benefits (wages, household services, disability, etc;) will cover you, your passengers, and family members in your household, even if they're not insured under your policy. PIP doesn't cover property damage.

    If you live in a state that requires PIP, some insurers may automatically add it to your policy. When insurers pay claims, PIP typically comes before your medical insurance. In most states, PIP coverage will be in the primary position to pay out coverage. Your health insurance, including Medicare and Medicaid, will come next.

  2. Loan/Lease Payoff Coverage (Gap Insurance)

    Gap coverage is an optional auto insurance coverage that protects you from depreciation. It's triggered when your car is totaled in an accident or stolen.

    This type of insurance covers the difference between what you owe on your vehicle and what it was worth. Typically, when you buy or lease a car, its value begins to decrease as soon as you leave the dealership.

    This drop in value leaves a gap between what you owe and what your vehicle is currently worth. When the amount left on your loan is more than what the car is currently worth, gap coverage can pay the difference.

    For example, if you took out a $20,000 on your loan, and your vehicle is only worth $14,000 the day of the accident, your policy will pay for the $6,000 gap (minus any deductible that you have).

    Having this coverage is essential to protect yourself in several situations where there is a large difference between your car's value and what you currently owe. You should consider gap coverage in several situations:

    • You've financed a car that has a high depreciation level.
    • You've used a small down payment to lease or purchase a brand-new car.
    • You're financing your vehicle for more than 48 months.
    • Your family only has one car and can't go without it for an extended period.
  3. OEM Endorsement

    Some car insurance companies don't always use the car manufacturer's parts to replace ones damaged in car accidents. Instead, they may depend on third-party manufacturers to provide replacement parts or substitute used parts for your car repairs.

    You can use this insurance to buy brand-new, authentic parts from the original equipment manufacturer (OEM).

  4. Rental Car Reimbursement Coverage

    This coverage is optional, but it's essential if you only have one car and need it for work or errands. After an accident, you may find yourself without a vehicle.

    If you're involved in a collision covered by your policy, your insurer will reimburse you for the fees to rent a car while a mechanic repairs your car. You don't need to depend on others as your source of transportation when you have this insurance.

  5. Towing and Roadside Assistance

    Your insurance company may include towing and roadside assistance in full coverage auto insurance policies. It includes towing services, along with other options such as changing a flat tire or jumping a dead battery.

  6. Full Glass Coverage

    Frequently, any glass damage to your windows will be covered if you get a full coverage insurance option for your vehicle. This damage falls under comprehensive coverage.

    Some individuals who get a high-deductible comprehensive insurance policy may have their glass coverage wiped out. For better protection, pay a higher premium to get a cheaper deductible on your full coverage policy or one that has a less expensive one only for glass claims.

  7. Vanishing Deductible

    This option doesn't automatically come with full coverage car insurance packages that promise full coverage. It's only offered when your preferred carrier offers a vanishing deductible for every year of your safe driving. You'll need to pay additional fees to get this full coverage insurance option before an accident occurs on the road.

    If you need dependable full coverage for your vehicle, you can compare automobile policies using SmartFinancial's technology by entering your zip code below.

Gap coverage is an optional auto insurance coverage that protects you from depreciation.

Who Has the Cheapest Full Coverage Rates?

Are you searching for the cheapest car insurance? Cover your vehicles with full coverage insurance policies from the following insurers. These insurance company rates will differ depending on factors like your credit score, home city, driving record, and other factors.

Full Coverage Car Insurance Cost Estimates

Insurance Company Full Coverage Minimum Coverage
USAA$120$48
Erie$138$47
Farm Bureau Insurance$159$65
American Family$181$70
Auto-Owners Insurance$187$79
Nationwide$202$88
MetLife$215$95
Travelers$262$127
Allstate$306$129

Compare rates with SmartFinancial for free. After you enter your zip code, we'll ask you a few quick questions about yourself and the full coverage insurance you need. Afterward, we'll sort through hundreds of car insurance companies. Our tools will help you find the best car insurance rates in your state, along with any discounts. You'll be able to review your auto policy offers and find the coverage that best fits you.

Get a Free Auto Insurance Quote Online Now.

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