What is considered full-coverage car insurance?
A full-coverage car insurance policy refers to a collection of coverages that protect you from the legal and financial liabilities of an accident, as well as physical damages to your vehicle.
Here are the coverage types that are usually included in full-coverage auto insurance.
Liability coverage
Liability insurance includes two parts — bodily injury liability coverage and property damage liability coverage.[1] It only applies when you cause an accident and the other driver suffers losses.
In the case of an at-fault accident, the bodily injury liability portion of your policy compensates the other driver for any medical expenses. The property damage liability portion pays for their car repairs. Liability insurance also covers your legal fees if another driver sues you.
In most states, personal liability insurance is a legal requirement. The minimum coverage limits for liability insurance are different in every state, but there’s no guarantee that a minimum-coverage policy will cover the full cost of the damages after an accident.
Collision coverage
Collision insurance pays for your vehicle’s repairs after an accident you’re responsible for. It also covers single-car crashes and rollovers. Collision insurance is not legally required, but lenders typically require it if you lease or finance your car.
With most policies, the coverage limit of a collision insurance policy is the actual cash value (ACV) of your vehicle, which is the original cost of your vehicle minus depreciation.
Important Information:
Depreciation accounts for normal wear and tear, mileage, age, and more.
Comprehensive coverage
Comprehensive coverage pays for your vehicle’s repairs when the car is damaged in a non-collision event.[1] It’s an optional policy, but it’s often required for drivers who lease or have an auto loan.
Comprehensive insurance covers a variety of potential losses, including:
Like collision insurance, the policy limit for comprehensive insurance is usually the ACV of your vehicle. If you file a claim, you’ll generally pay a deductible before your insurer covers the damages, up to the policy limit.[2]
Medical payments coverage
Medical payments (MedPay) is an optional car insurance policy typically included with full-coverage car insurance. It provides coverage for your and your passengers’ medical bills if you’re injured in a covered accident, no matter who was at fault.
You can use your coverage to pay for doctor’s visits, emergency room care, stitches, X-rays, rehabilitation, and accident-related medical costs. In the event of a fatal car accident, most MedPay policies also cover funeral costs.
When you purchase a full-coverage insurance policy, you get to choose your own MedPay coverage limits. To figure out how much coverage you need, consider your health insurance coverage.
In general, if you have a robust health insurance policy with great benefits and a low deductible, you might not need much MedPay coverage. If you could comfortably afford to pay for your medical bills out of pocket, MedPay might be less important for you.
However, if you don’t have health insurance, or if your health insurance policy has high out-of-pocket costs, it might be worth choosing a higher policy limit for MedPay coverage. Every car insurance company offers different policy limits for MedPay. You can usually see the options when you apply for a quote.
Optional add-ons
Most car insurance companies sell optional policies, also called endorsements, which fill gaps in the standard policy and provide more customized coverage. Every car insurance provider offers different endorsements, but some of the most common policies include the following:
Roadside assistance covers the cost of basic roadside car repairs. Most policies will cover flat tire changes, dead batteries, extrication, fuel delivery, and towing (up to a certain mileage).
Accident forgiveness waives your first minor at-fault accident and prevents your premium from increasing after a crash. Sometimes, this policy is only available to drivers with a clean driving record or no claims history.
Gap insurance can be valuable if you lease or finance your vehicle. If your car is totaled, gap insurance covers the difference between what you owe on the car loan and its diminished value.
Uninsured/underinsured motorist insurance (UM/UIM) applies when you get into an accident with an uninsured driver or a driver who doesn’t have enough coverage to pay for your losses in full. In some states, this is a required policy.[3]
Personal injury protection (PIP) is required in most no-fault states. This policy pays for your medical expenses and lost wages after an accident, regardless of which driver was responsible. In states that don’t require PIP, you can sometimes purchase it as an endorsement.
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