Full coverage auto insurance is one of the most confusing and misunderstood terms in the insurance world.
Case in point: full coverage auto insurance includes comprehensive coverage. So it’s more comprehensive than comprehensive, but neither is really comprehensive.
See what I mean?
While full coverage is confusing, it’s also a critical term for every driver to understand since it could be exactly the amount of coverage that you and your car need.
So, what is full coverage? What does it include? What doesn’t it include? How much does it cost, and when is it worth it?
Finally, how can you save big on full coverage?
Let’s dive into “full” coverage auto insurance!
What’s Ahead:
TL;DR: What Is Full Coverage Auto Insurance?
Full coverage auto insurance typically refers to a policy that includes the following trifecta of coverage:
- Liability insurance.
- Collision insurance.
- Comprehensive insurance.
While it’s certainly beefy, full coverage doesn’t cover everything. It often doesn’t include uninsured/underinsured motorist coverage, personal injury protection (PIP), and more — and you’ll still have a deductible.
Finally, full coverage auto insurance is often required if you loan or lease a vehicle.
But let’s dive into specifics before deciding whether full coverage auto insurance is right for you.
What Does Full Coverage Auto Insurance Cover?
For starters, you should know that there’s no universal definition of “full coverage.”
Some auto insurance providers interpret “full coverage” as the whole kit and kaboodle: liability, collision, comprehensive, UM/UIM, PIP, towing and labor, and the kitchen sink.
But most just interpret “full coverage” as liability, collision, and comprehensive — and let you build on your policy from there.
Full coverage auto insurance, then, is like a loaded baked potato. Most restaurants will interpret that as bacon, cheese, and sour cream. Some will also include chives and green onion, but you shouldn’t assume.
Anyways, let’s cover what a loaded baked potato looks like in the auto insurance world. Here’s a more detailed breakdown of what full auto insurance coverage typically includes:
- Liability insurance, which covers stuff you’re liable for in an at-fault accident, like the other driver’s repair bills (property damage liability) and medical bills (bodily injury liability).
- Collision insurance, which covers damage to your car if you hit something. It also covers damage if you’re hit by an underinsured/uninsured motorist or if you’re the victim of a hit-and-run.
- Comprehensive insurance, which covers damage to your car that isn’t the result of a car accident — things like theft, vandalism, falling trees, and weather damage.
So again, full coverage is pretty extensive. But it’s not full.
Notably, full auto insurance coverage typically doesn’t include:
- Uninsured/underinsured motorist insurance, which covers you in the event the other driver is liable, but they don’t have the insurance coverage to pay you (or not enough coverage to pay the full amount).
- Personal injury protection, or PIP, which covers your and your passengers’ medical bills and lost wages in certain states.
- Towing and labor, which covers the cost of towing and “roadside labor,” i.e., the kinda stuff AAA could do for you in a parking lot (tire changes, emergency fuel, etc.).
- Gap insurance, which covers the “gap” between what the insurance pays out if you total your car and the cash amount you still owe on your auto loan. (Although technically, “gap” stands for guaranteed asset protection.)
- Rental reimbursement insurance, which covers the cost of a rental while your car is in the shop for repairs.
As you can see, “full coverage” only includes three of the eight most common types of auto insurance. Full coverage doesn’t mean your deductible goes to $0.
So don’t make the mistake of thinking full coverage auto insurance suddenly makes your car — and your wallet — totally bulletproof.
How NOT to drive, even if you have full coverage auto insurance | Source: Giphy
Despite not quite being as “full” as it leads on, full coverage auto insurance can still be a smart option for certain drivers.
What Does Full Coverage Auto Insurance Cost?
According to PolicyGenius, the average annual premium for a full coverage auto insurance policy with liability, collision, and comprehensive is around $1,662.
For the under-25 age group, however, that number jumps to $4,824.
So right off the bat, if you’re young and on a budget, full coverage auto insurance simply may not be an option for you. Not a lotta folks can spend $5,000 a year on a car in total, let alone the insurance policy.
If you’re still interested in getting full coverage at a young age, consider a provider that favors young drivers like Progressive or Allstate.
Read more: Best Car Insurance Companies for Young Adults
But why is full coverage so expensive? What’s the most expensive ingredient in the full coverage baked potato?
According to the Insurance Information Institute, liability insurance is definitely the bacon, making up 54% of the average cost of full coverage auto insurance.
Collision is next, making up roughly 32%, and Comprehensive is just 14%.
And the type of car you drive can make a (small) difference.
AAA’s Your Driving Costs 2021 report shows how the cost of full coverage auto insurance tends to vary by body style, but not by much. It’s still interesting to note how much cheaper subcompact SUVs are to insure than sedans.
Here’s AAA’s reported average cost for 12 months of full coverage auto insurance, based on body styles:
- Small sedan: $1,353.
- Medium sedan: $1,403.
- Subcompact SUV: $1,298.
- Compact SUV (4WD): $1,292.
- Medium SUV (4WD): $1,296.
- Midsize pickup: $1,313.
- 1/2 ton/crew-cab pickup: $1,379.
- Hybrid vehicle: $1,365.
- Electric vehicle: $1,381.
Pros & Cons of Full Coverage Auto Insurance
Pros:
- Covers almost anything that could happen to your car. By adding collision and comprehensive insurance to basic liability, full coverage will protect your car after most incidents, whether it’s a wreck or hail damage.
- Good for cars with expensive parts and labor. If you drive a Mercedes, BMW, or other luxury/sports car, having full coverage can spare you from an extremely expensive repair bill.
- Brings peace of mind. Having full coverage auto insurance on your car can help you sleep better, knowing that your expensive four-wheeled investment is protected.
Cons:
- “Full” can be misleading. Despite the name, full coverage auto insurance doesn’t include most forms of coverage — including towing and labor, gap insurance, and more.
- Extremely expensive for under 25s. Collision insurance tends to be pretty pricey for drivers under 25, and therefore, the full coverage package can be financially out of reach for many young drivers.
- Doesn’t usually come with a discount. Unlike home and auto bundles, insurance providers don’t usually provide you with a discount for purchasing full coverage. You’re basically just paying full price for a policy that includes liability, collision, and comprehensive.
Who Needs Full Coverage Auto Insurance?
Alrighty, let’s get down to brass tacks. Do you need full coverage auto insurance?
Well, it’s basically the same as asking do you need liability and collision and comprehensive insurance?
To find out, I’d strongly recommend just starting from scratch and going all the way through our guide, What Type of Car Insurance Do You Need? By the end of that feature, you’ll have an itemized list of:
- Which type of insurance you need,
- How much, and
- What deductible is best for you.
That all being said, here’s a quick guide to determining if you need full coverage:
You Might Want Full Coverage Auto Insurance Coverage If:
You Have a Newer and/or Expensive Car
Driving around a nice new car without collision and comprehensive coverage is a big risk, since you’ll have no protection if you cause an accident or something happens to your car.
You’re Not the Best Driver
I have a few friends who, admirably, have the self-awareness to know that they’re not champion Formula 1 drivers. So they purchase full coverage auto insurance to protect them from themselves.
You Live in an Area with Bad Drivers/Bad Weather
If you generally sense that you and your car are at risk every time you pull out — and even when you park — getting full coverage auto insurance could be a smart preemptive move before the inevitable accident or incident.
You Have an Auto Loan or Lease
Most lenders and lessors actually require you to get full coverage auto insurance, since you’re technically driving around their property and they’ll want to protect it.
You Value Peace of Mind
Finally, even if none of the above applies to you, you may still opt to purchase the full trifecta of liability, collision, and comprehensive just to know your expensive four-wheeled asset is protected.
You Can Probably Pass on Full Coverage Auto Insurance If:
You Have an Older/Less Valuable Car
If your car is worth $6,000 or less, the math to purchase full coverage auto insurance just doesn’t add up. You’ll pay an extra ~$1,200 a year for it — 20% of your car’s value — and the maximum payout will only be ~$5,000 after a $1,000 deductible.
You Generally Drive — and Park — in Safe Places
Broadly speaking, collision and comprehensive insurance protect your car when you’re driving and when you’re parked, respectively. If you work from home and garage park your car, full coverage auto insurance probably isn’t necessary.
You Want to Spend as Little as Possible on Auto Insurance
If you’re looking for the bare amount of coverage that’s still sensible and responsible, you’re probably looking at liability insurance that’s just above your state minimums. You can probably skip collision and comprehensive.
The Loss of Your Car Wouldn’t Impact Your Income
If the temporary or permanent loss of your car wouldn’t seriously disrupt your life, you’re probably OK to forgo full coverage auto insurance.
How to Save on Full Coverage Auto Insurance
Whether you’re looking to save on full coverage or just liability, you should know that the same principles apply. I’ve written a full guide on six ways to save on auto insurance, but here’s a TL;DR:
1. Take a Defensive Driving Course
You can get a 5% to 15% discount on your total premium by taking a one-hour, $25 defensive driving course online.
2. Call Your Provider and Straight Up Ask for Discounts
Just ask them, “Can you help me lower my annual premiums without changing my coverage levels?”
3. Update Your Driver Profile
If you’ve moved to a safer zip code (crime and weather-wise), drive less, or got married, these are all things that can lower your premiums — but your provider won’t know until you tell them.
4. Raise Your Deductible
If your income has risen and you can now afford to pay $1,000 or even $1,500 out of pocket in the case of a claim, you might consider raising your deductible to drastically lower your premiums.
5. Participate in a Telematics Program
Driver monitoring programs like GEICO DriveEasy and Progressive Snapshot often come with an immediate 5% to 10% discount just for opting in, and a further discount of up to 30% for driving like a Driver’s Ed teacher for six months.
6. Shop Around
To protect my beloved 2001 Miata, I shop around for a new policy every six months (here’s why you should, too). When I do, the premiums for a six-month policy typically range from $181 to $1,408. And the provider offering $181 was the last one I surveyed. Shop around, dear reader!
The Bottom Line
Full coverage auto insurance is like the baked potato of auto insurance: it may not include everything on the menu, but it’s still filling, and to many, will be the perfect amount of food.
Featured image: PK Studio/Shutterstock.com
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