Understanding Full Coverage Auto Insurance


Even though the term “full coverage auto insurance” can be illusive, most drivers know that full coverage provides more financial protection than basic coverage.

But what does “full coverage” cover and what does it not?

Let’s start with what it always includes:

• Liability – This coverage is the backbone of all auto insurance policies. As long as you have an insurance policy in place, you can be confident it will include some form of liability coverage.

• Collision – This coverage adds a second level of protection that covers damages to your car when you cause an accident. Without it, you would have to foot the bill for all damages to your car and passengers if you were to cause an accident.

• Comprehensive – This coverage adds a third level of protection that covers damages to your car that could happen that aren’t related to an automobile accident, such as vandalism, natural disaster or theft.

Now lets take a closer look at each type of coverage and how it relates to “full coverage”:

Liability & Full Coverage

The important thing to remember in regards to “full coverage insurance” is that a full coverage insurance plan can still have very low coverage limitations.

For example, if your state mandates you only carry $20,000 in medical liability coverage and you settle on a policy with that level of limitation built in, if you are involved in an at-fault accident and the medical damages to the other party total $100,000, even though you have a policy that was referred to as “full coverage” when you bought it, you will still be responsible to pay for all damages that exceed your $20,000 limit; in this case $80,000. That doesn’t sound very “full”, does it? That is why it’s important to understand that NO coverage is ever truly “full coverage”. This is why many insurance professionals try to avoid using the term full coverage and are usually very careful to define it when they do.

Collision & Full Coverage

Again, although collision is designed to protect the assets you’ve invested in your car when you cause an accident, the amount of that protection is determined by the limitations you decide on when you purchase your full coverage insurance policy. Even with a “full coverage” policy, you are not obligated to protect the “full value” of your car. Not doing so will lower your monthly premiums, but be aware that your car is not fully covered if you make that decision.

Comprehensive & Full Coverage

Like both liability and collision insurance, specific limitations are also imposed on the comprehensive part of your policy. For example, if a tree falls on your car and totals it and the limit you’ve imposed on your comprehensive coverage is $10,000 and your car is worth $15,000, you will end up loosing $5,000 worth of assets.

None-the-less, the reality is the term does exist and is actually very widely used, so it’s best to understand how to use it to your benefit.

If you are interested in having the assets you’ve invested in your car be protected in the case that you were the cause of an accident, your car is stolen or vandalism or forces of nature damage it, then full coverage is for you!

To summarize, what does full coverage mean?

It means it is a policy that will include at least the basic levels of liability, collision and comprehensive insurance. That’s it!

What does it NOT mean?

• It does not have anything to do with the dollar limitations defined in your policy (and there are always limitations)

• It does not usually include add-on coverages that might be important to you, such as Roadside Assistance or Gap Insurance.

So, if you want to feel adequately protected when purchasing full coverage insurance, you will need to look hard and deep into where you want your policy’s limitations to capped at and what add-on coverages you would like to include.

Finding Your New Policy

Once you are ready to start shopping for a new full coverage insurance policy, we recommend starting at a site like Cheap Full Coverage Auto Insurance. You always want to compare quotes before settling on any new insurance policy and they happen to specialize in full coverage quotes.

A final word of advice, always make sure you are comparing apples with apples when shopping for full coverage insurance. In other words, you need to make sure all the quotes you gather include the same levels of liability and the same add-on features. If they don’t, it will not be a fair comparison. For example, AllState automatically includes roadside assistance coverage in their quotes, so comparing theirs to others that don’t include roadside assistance coverage can lead you to buying a policy that may costs less, but also may contain less coverage.

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