What Is Considered Full Coverage Car Insurance?
Unpack the true meaning of "full coverage" car insurance. Understand its core components and what it actually covers—and doesn't.
The term “full coverage” in car insurance does not refer to a single, standardized policy. Instead, it describes a combination of different insurance coverages that together offer broad protection for a vehicle and its occupants. This combination typically includes liability, collision, and comprehensive insurance, though the specific elements can vary based on individual needs and insurer offerings. It is a common phrase used to indicate a more extensive level of protection beyond basic state-mandated minimums.
Primary Components of Full Coverage
A policy commonly referred to as “full coverage” typically includes three fundamental types of protection: liability, collision, and comprehensive coverage. These components address different aspects of potential financial loss arising from vehicle incidents. This combination of coverages aims to provide a robust safety net for various scenarios on the road.
Liability coverage is a legally required component in most states and is foundational to any insurance policy. It protects a policyholder from financial responsibility if they are at fault for an accident that causes injury to others or damage to their property. Bodily Injury Liability pays for medical expenses, lost wages, and pain and suffering for individuals injured in an accident caused by the policyholder. Property Damage Liability covers the costs to repair or replace property belonging to others, such as vehicles, fences, or buildings, damaged in an accident for which the policyholder is responsible. This coverage also helps with legal fees if a lawsuit is filed against the at-fault driver.
Collision coverage helps pay for damage to the policyholder’s own vehicle resulting from a collision with another vehicle or object, such as a tree or guardrail. This coverage applies regardless of who is determined to be at fault for the accident. It can also cover single-car accidents, including rollovers. If a vehicle is financed or leased, lenders frequently require collision coverage to protect their investment.
Comprehensive coverage, sometimes called “other than collision” coverage, protects a policyholder’s vehicle from damage caused by events not involving a collision. Common examples include theft, vandalism, fire, natural disasters like floods or hail, falling objects, and collisions with animals. Like collision coverage, comprehensive coverage is often required by lenders for financed or leased vehicles.
Understanding Supplemental Coverages
Beyond the primary components, several supplemental coverages can enhance the protection offered by a “full coverage” policy. These additional options address specific needs and provide broader financial security. These coverages go beyond basic damage to vehicles and third-party liabilities.
Personal Injury Protection (PIP) and Medical Payments (MedPay) cover medical expenses for the policyholder and their passengers, regardless of who was at fault for the accident. PIP, available in certain states, can be more extensive, covering not only medical bills but sometimes also lost wages and expenses for essential services like childcare if injuries prevent daily activities. MedPay, on the other hand, is typically focused solely on medical and funeral expenses.
Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage protect a policyholder when the at-fault driver either has no insurance or insufficient insurance to cover the damages and injuries they cause. Uninsured Motorist Bodily Injury (UMBI) helps pay for medical bills, lost wages, and pain and suffering for the policyholder and passengers. Uninsured Motorist Property Damage (UMPD) covers damage to the policyholder’s vehicle. Underinsured Motorist coverage similarly steps in when the at-fault driver’s liability limits are too low to cover the full extent of the damages or injuries.
Common Misconceptions About Full Coverage
Despite its name, “full coverage” car insurance does not mean a policy covers every conceivable scenario or type of loss. The term is a general descriptor for a robust combination of coverages, not a guarantee against all financial outlays. Many drivers assume “full coverage” encompasses every potential incident, leading to misunderstandings.
One common misconception is that “full coverage” automatically includes rental car reimbursement. This optional coverage pays for the cost of a rental vehicle while the policyholder’s car is being repaired after a covered claim. It typically has daily limits and a maximum number of days for reimbursement, such as $30-$50 per day for up to 30 days.
Roadside assistance is another feature often mistakenly assumed to be part of standard “full coverage.” This add-on provides services like towing, jump-starts, tire changes, and fuel delivery when a vehicle breaks down. It is a separate endorsement that must be added to a policy.
Gap insurance is also frequently misunderstood as being inherent to “full coverage.” This coverage is specifically designed for situations where a vehicle is totaled or stolen, and the amount owed on a loan or lease is more than the vehicle’s actual cash value. Gap insurance pays the difference between the insurance payout and the outstanding loan balance, preventing the policyholder from owing money on a vehicle they no longer possess.