What Is “Full Coverage” Auto Insurance?

Full coverage is not a type of policy, but rather a term used to describe a combination of coverages, often with higher limits. Typically, “full coverage” will consist of the three following types of coverage:

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  1. Depending on where you live, either liability or no-fault insurance, along with any other coverages at or above the limits required by your state: In many states, whoever caused the auto accident is held financially responsible for the other person’s injury expenses. In such states, it is legally required to have liability coverage. When you are at fault in an accident, liability pays for the bodily injury and property damage expenses of the other driver.
    In certain other states, your insurance would cover your own injury expenses, no matter who caused the auto accident. In most of these “no-fault” states, drivers are required by law to purchase at least a minimum amount of personal injury protection (PIP) coverage. Also known as no-fault insurance, if you are injured in an accident, PIP coverage can help pay for your medical bills, and in certain instances lost wages and other non-medical expenses. Depending on where you live, other types of coverage may be required as well.
    Whether you live in a state that requires liability or PIP, a full coverage policy will include one of these coverages as a component. Often, a full coverage policy will have liability or PIP coverage amounts (e.g. how much the insurance will pay) that are much higher than the state minimum level.
  2. Collision: In the event of an accident, collision coverage helps pay to repair or replace your vehicle, no matter who caused the accident. Collision also covers accidents involving objects, such as if your car crashes into a tree or a fence. Collision may be required by the lienholder if you are leasing or financing your car. Most full coverage policies include collision.
  3. Comprehensive: In the event your vehicle is stolen or damaged by a non-vehicle (think the weather, animals, or vandalism), comprehensive can help pay to repair or replace your car. Like collision, comprehensive may be required if you are leasing or financing your car and is often part of a full coverage policy.

Full coverage policies will have higher premiums than state minimum insurance. However, in the event of a more serious accident, a full coverage policy can protect you from paying high out-of-pocket costs. In other words, a full coverage policy can significantly lower your financial risk when an auto accident occurs.

Additional Coverages

In addition to the three types of coverages above, a full coverage policy may also include:

  1. Medical Payments (MedPay): MedPay is available in certain states, typically where personal injury protection (PIP), a similar type of coverage, is not an option. In the event you, or your passengers, are injured in an auto accident, MedPay can help pay for the medical expenses. MedPay is a good option for those who do not have health insurance with post-accident coverage.
  2. Uninsured and Underinsured Motorist (UM) Coverage: If you are injured in an accident caused by a driver who has no insurance or insufficient coverage, your uninsured and underinsured motorist (UM) coverage will help pay for your medical expenses. In many states, over 20% of drivers are uninsured. Having UM can provide added peace of mind. UM is often part of a full coverage policy.
  3. Rental Reimbursement: If your car is being repaired due to a covered auto accident, rental reimbursement can help pay for a rental car to use in the meantime.
  4. Roadside Assistance: Roadside assistance can help you when you need it most. When having car trouble, roadside assistance can provide help with tire changes, oil work, battery jumpstarts/replacement and more. Towing to a repair shop or other location within a certain radius is also included.

As you can see, full coverage car insurance has several components. While legally meeting your state’s minimum coverage requirements is of course important, it may not be enough. Though premiums will be higher, it is also important to consider the added financial protection and convenience a full coverage policy can provide.

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