What Is A Full Coverage Car Insurance Policy?

With the increased costs associated with car repairs, medical bills, and other expenses associated with car accidents, it’s important to make sure you have the right type of car insurance coverage in place. “Full coverage car insurance” is a term that might be heard when discussing car insurance options and refers to a combination of different types of car insurance coverages that provide more comprehensive protection than just liability insurance alone.

While there is no single policy that’s called a “full coverage car insurance policy,” it often refers to a customized combination of coverages, such as liability, collision, and comprehensive insurance (most standard car insurance policies include some combination of the three types of coverage mentioned). By having all three types of coverage, a policyholder may be better protected in the event of an accident or event. Depending on the policy type and the amount of coverage selected, medical bills, car repair costs, and expenses arising from third party liability may be covered.

Common Misconceptions: A frequent misconception about full coverage is that it includes every possible scenario, such as personal belongings inside the car or every type of natural disaster. In reality, even full coverage has its limitations and exclusions. It's essential to understand what specific policies are included under the umbrella of full coverage.

Coverage Types Which May Be Included in Full Coverage Car Insurance

As mentioned above, “full coverage” refers to combining different auto insurance policy coverages into a one comprehensive policy. There are three types of coverages which are generally included:

Liability coverage typically covers the insured’s liability arising from third party property damage or third party bodily injury claims and is usually required by law.

Collision coverage typically covers damages to the insured person’s car in the event of an accident.

Comprehensive coverage typically covers damages to the insured’s car from non-accident-related events, such as theft, vandalism, or natural disasters.

In addition to the three types of coverage mentioned above, some full coverage policies may also offer additional coverages, such as:

Uninsured/underinsured motorist coverage
This type of insurance provides coverage for expenses resulting from an accident with an uninsured or underinsured driver (or a hit and run). When an uninsured or underinsured individual is responsible for an accident, but does not have the financial ability to pay compensation, UM/UIM coverage can help cover the resulting costs.

Personal injury protection (PIP)
Sometimes referred to as “no-fault insurance,” personal injury protection insurance helps cover medical expenses incurred by the policyholder and passengers resulting from a covered accident, regardless of fault. PIP insurance can also help cover additional expenses such as childcare expenses, or lost earnings and wages, resulting from the auto accident. This type of insurance is not available in every state, so it's important to fully understand your policy and examine what is available where you live.

Medical payments coverage
Medical payments insurance helps cover medical expenses due to injuries suffered by the policyholder, and any passenger in the vehicle, resulting from a covered auto accident, regardless of fault. However, unlike PIP insurance, Medical Payments insurance does not cover expenses such as lost wages and childcare. This type of coverage is required in some states and optional in others, so it is important to carefully review what is available/required where you live.

Gap insurance
This type of insurance can help cover the difference between a car’s actual value and what may still be owed on the auto loan. It may be useful in scenarios where the loan amount is more than the car’s worth.