The term “full coverage” is often used in conversations about auto insurance, leading many drivers to believe that it offers blanket protection in any situation. However, the term is a bit misleading. While “full coverage” typically refers to a combination of liability, collision, and comprehensive insurance, it doesn’t mean that you’re covered for every possible risk. Understanding what full coverage actually includes—and what it doesn’t—can help you make informed decisions about your auto insurance and avoid unpleasant surprises in the event of an accident or damage.
In this article, we’ll break down the components of full coverage auto insurance, clarify common misconceptions, and explain situations where even full coverage might leave you exposed.
1. What Is Full Coverage Auto Insurance?
“Full coverage” isn’t a specific type of insurance policy. Instead, it refers to a combination of several coverages designed to protect both you and others in case of an accident or other incident. A full coverage policy typically includes:
a. Liability Insurance
Liability insurance is required by law in most states. It covers the cost of damages you cause to others in an accident. This includes:
- Bodily Injury Liability: Covers medical expenses, lost wages, and legal fees for the other party if you are at fault.
- Property Damage Liability: Covers the cost of repairing or replacing someone else’s property that you damage, such as their car, fence, or other property.
It’s important to note that liability insurance doesn’t cover damage to your own vehicle or medical expenses for you or your passengers. That’s where collision and comprehensive coverage come in.
b. Collision Coverage
Collision insurance covers damage to your own vehicle resulting from an accident, regardless of who was at fault. This can include:
- Accidents involving other vehicles
- Collisions with stationary objects, such as fences or trees
If your car is damaged in an accident, collision coverage will pay for the repairs or, in the case of a total loss, the value of the vehicle.
c. Comprehensive Coverage
Comprehensive insurance covers damage to your vehicle caused by non-accident-related incidents. This can include:
- Theft
- Vandalism
- Natural disasters (hail, flooding, etc.)
- Falling objects
- Animal collisions
Comprehensive coverage is designed to protect you from a range of risks that aren’t related to a collision with another vehicle.
2. What Full Coverage Doesn’t Include
Although full coverage provides a broad range of protection, it doesn’t cover every possible scenario. Here are some common exclusions that may surprise you:
a. Medical Expenses for You and Your Passengers
While liability insurance covers medical expenses for the other party if you’re at fault, it doesn’t cover your own medical bills or those of your passengers. To be covered in these situations, you’ll need additional coverage options such as:
- Personal Injury Protection (PIP): Covers medical expenses, lost wages, and other related costs for you and your passengers, regardless of who is at fault.
- Medical Payments (MedPay): Covers medical expenses for you and your passengers, but typically does not cover lost wages or other non-medical expenses.
b. Rental Car Coverage
If your car is in the shop after an accident, full coverage doesn’t automatically provide a rental car while your vehicle is being repaired. To ensure you have a rental car, you’ll need to add rental reimbursement coverage to your policy. This optional coverage will pay for the cost of a rental vehicle, up to a specified limit, while your car is being repaired after an accident.
c. Gap Insurance
Full coverage pays for the current market value of your car if it’s totaled in an accident, but it doesn’t cover the gap between what your car is worth and what you owe on it. If you owe more on your car loan than your car’s current value (a situation known as being “upside-down” on your loan), you could be left paying the difference out of pocket.
To protect yourself in this scenario, you’ll need gap insurance. Gap insurance covers the difference between your car’s value and what you owe on it, ensuring you won’t be left with a significant financial burden if your car is totaled.
d. Roadside Assistance
Roadside assistance is not typically included in full coverage. If you get a flat tire, run out of gas, or need a tow, you won’t be covered unless you have added roadside assistance coverage to your policy. Many insurers offer this as an optional add-on, and it can provide peace of mind for situations where you’re stranded on the road.
e. Custom Parts and Equipment
If you’ve made modifications to your car, such as adding custom rims, a high-end sound system, or performance upgrades, full coverage may not cover the cost of replacing these custom parts if your vehicle is damaged or stolen. To cover these modifications, you may need to add custom parts and equipment coverage to your policy.
3. Understanding Your Coverage Limits
Even when you have full coverage, there are limits to how much your insurance will pay in the event of a claim. Each type of coverage—liability, collision, and comprehensive—comes with its own limits and deductibles, which affect how much you’ll pay out of pocket after an accident.
a. Liability Limits
Liability coverage is typically expressed as three numbers, such as 100/300/50. This means:
- $100,000 in coverage per person for bodily injury
- $300,000 in coverage per accident for bodily injury
- $50,000 in coverage for property damage
While state minimums for liability coverage vary, these limits may not be enough in a serious accident. For example, if you cause an accident that results in medical expenses exceeding your liability limits, you could be held personally responsible for the remaining costs.
b. Collision and Comprehensive Deductibles
Collision and comprehensive coverage usually have a deductible, which is the amount you must pay out of pocket before your insurance kicks in. Common deductible amounts range from $250 to $1,000. Choosing a higher deductible can lower your premiums, but it also means you’ll pay more out of pocket if you need to make a claim.
4. How to Customize Your Coverage for Full Protection
Given the gaps in full coverage auto insurance, it’s important to customize your policy to ensure you have the protection you need. Here are some ways to enhance your coverage:
a. Increase Your Liability Limits
If you have assets you want to protect, consider increasing your liability limits beyond the state minimums. Higher liability limits provide better protection in case of a major accident and can help shield you from costly lawsuits.
b. Add Personal Injury Protection (PIP) or Medical Payments Coverage
To cover medical expenses for you and your passengers, consider adding PIP or MedPay to your policy. These coverages ensure that you’re not left with large medical bills after an accident.
c. Consider Gap Insurance if You Have a Car Loan
If you’re still paying off a car loan and owe more than your car is worth, gap insurance is a smart investment. It can prevent you from being stuck with thousands of dollars in debt if your car is totaled.
d. Add Optional Coverages
Depending on your needs, you may want to add rental reimbursement, roadside assistance, or custom parts coverage to your policy. These optional coverages provide extra peace of mind and can save you from unexpected costs.
5. The Importance of Reviewing Your Policy Regularly
Your insurance needs can change over time, so it’s important to review your policy regularly to ensure you’re adequately covered. If you’ve recently purchased a new car, moved to a different state, or made modifications to your vehicle, you may need to update your coverage. Additionally, as your car ages, you may want to reassess whether collision and comprehensive coverage are still worth the cost.
Conclusion
While “full coverage” auto insurance offers robust protection, it’s not as all-encompassing as the term might suggest. Understanding the limitations of full coverage—and knowing which additional coverages are available—can help you tailor your policy to meet your needs. By customizing your coverage and reviewing your policy regularly, you can ensure that you’re protected in the event of an accident or other unexpected event.