Full coverage means collision and comprehensive insurance, plus your state's required liability limits
Full coverage is not a single policy type — it is a combination of three separate protections. Your state requires you to carry liability insurance, which pays for damage you cause to someone else's car or property. On top of that, full coverage adds collision insurance (pays for damage to your car when you hit something) and comprehensive insurance (pays for damage from weather, theft, vandalism, or animals). Most lenders require full coverage if you are financing or leasing a car.
The amount you pay depends on your deductible — the out-of-pocket cost you cover before insurance kicks in. A higher deductible ($1,000 instead of $500) lowers your monthly premium but means you pay more when you file a claim. Full coverage does not cover regular maintenance, wear and tear, or damage from driving without a license.
Key Takeaways
- Full coverage combines liability (required by law), collision, and comprehensive insurance into one package.
- Liability pays for damage you cause to others; collision and comprehensive pay for damage to your own vehicle.
- Your deductible determines how much you pay out of pocket when you file a claim, and higher deductibles lower your monthly cost.
- Lenders require full coverage on financed or leased vehicles, but you can drop it once you own the car outright.
- Full coverage does not include roadside assistance, rental car reimbursement, or gap insurance unless you add them separately.
Liability insurance: what you are required to carry
Liability insurance is the only part of full coverage that your state legally requires. It covers medical bills, lost wages, and property damage when you cause an accident. If you hit another car and the damage costs $15,000, your liability insurance pays the other driver's repair bill (up to your policy limit). If you cause an accident that injures someone, liability covers their hospital bills and ongoing medical care.
Every state sets a minimum liability limit you must carry. Most states require at least $25,000 per person and $50,000 per accident for bodily injury, plus $25,000 for property damage — but these minimums vary. If you cause damage that exceeds your limit, you are personally responsible for the rest. Many insurers recommend carrying higher limits ($100,000 per person / $300,000 per accident) to protect your assets if you cause a serious accident.
Collision insurance: damage when you hit something
Collision insurance pays to repair or replace your car when you hit another vehicle, a pole, a tree, or a guardrail — regardless of who is at fault. If you cause the accident, your collision coverage pays your repair bill after you meet your deductible. If someone else hits you, their liability insurance should pay, but if they are uninsured or underinsured, your collision coverage protects you.
Collision insurance does not cover damage from weather, flooding, or theft. It also does not cover accidents caused by mechanical failure or normal wear. The payout is based on your car's current market value, not what you paid for it. If your car is worth $8,000 and repair costs $7,500, the insurer pays $7,500 minus your deductible. If repairs cost more than the car is worth, the insurer declares it a total loss and pays you the car's market value.
Comprehensive insurance: weather, theft, and other non-collision damage
Comprehensive insurance covers damage to your car that is not caused by a collision. This includes theft, vandalism, weather (hail, flooding, wind), animal strikes, falling objects, and fire. If a tree branch falls on your car during a storm, comprehensive pays for the damage. If someone breaks your window or steals your stereo, comprehensive covers it. If a deer runs into your car, comprehensive pays for repairs.
Like collision, comprehensive has a deductible you pay out of pocket. The insurer pays the rest of the repair cost, up to your car's current market value. Comprehensive does not cover damage from normal wear, mechanical breakdown, or accidents you cause (those are collision). It also does not cover damage from flooding if you drove into standing water intentionally — that is considered negligence.
What full coverage does not include
Full coverage does not automatically include roadside assistance, rental car reimbursement, or gap insurance. Roadside assistance covers towing, lockouts, and jump-starts when your car breaks down. Rental car reimbursement pays for a rental car while yours is being repaired. Gap insurance covers the difference between what you owe on a loan and what your car is worth if it is totaled — this matters most in the first few years of a loan, when you owe more than the car is worth.
You can add these as separate riders to your policy, usually for a small monthly fee. Full coverage also does not cover regular maintenance (oil changes, tire replacement), wear and tear, or damage from driving without a valid license. It does not cover damage caused by racing, driving under the influence, or using your car for commercial purposes like rideshare (unless you have a commercial policy).
How deductibles affect your cost and your claim
Your deductible is the amount you agree to pay toward repairs before insurance covers the rest. Common deductibles are $250, $500, $1,000, and $2,500. A $500 deductible means if you file a collision claim for $3,000 in damage, you pay $500 and insurance pays $2,500. A higher deductible lowers your monthly premium because the insurer's risk is lower, but it means you pay more when you actually need to file a claim.
You can set different deductibles for collision and comprehensive. Many people choose a higher deductible for comprehensive (since major weather or theft events are less common) and a lower one for collision (since minor fender-benders happen more often). Before you raise your deductible to save money, make sure you have enough cash on hand to cover it if you need to file a claim.
When you can drop full coverage
If you own your car outright and do not have a loan, you can legally drop collision and comprehensive insurance and carry only liability. This saves money but leaves your car unprotected if you cause an accident, hit something, or experience theft or weather damage. If you cause a $10,000 accident and carry only liability, your liability insurance pays the other driver's damages, but you pay for your own repairs out of pocket.
Most financial advisors recommend keeping full coverage as long as your car is worth more than 10 times your deductible. If your car is worth $5,000 and your deductible is $500, full coverage makes sense. If your car is worth $1,500 and your deductible is $500, dropping comprehensive and collision might save you money without much risk. Run the math: add up what you would pay in premiums over a year, then compare that to your car's value and your ability to pay for repairs yourself.
Frequently Asked Questions
Does full coverage pay for maintenance and repairs to broken parts?
No. Full coverage only pays for damage from accidents, weather, theft, or vandalism. Regular maintenance (oil changes, tire replacement, brake pads) and repairs to broken mechanical parts (engine, transmission, suspension) are your responsibility. If your transmission fails, your insurance will not cover it, even with full coverage.
What happens if I cause an accident and my deductible is $1,000 but damage is only $800?
You pay the full $800 out of pocket because the damage is less than your deductible. Insurance only pays when repair costs exceed your deductible. This is one reason some people choose a lower deductible — to avoid paying the full cost of minor accidents.
Can I use full coverage if I cause an accident while driving for a rideshare service?
No. Your personal auto insurance, including full coverage, does not cover accidents that happen while you are working for a rideshare company. You need a separate commercial or rideshare policy for that. Check your policy's exclusions or call your insurer to confirm what activities are covered.
If my car is totaled, does full coverage pay what I owe on my loan?
Full coverage pays your car's current market value, which may be less than what you still owe. If you owe $12,000 and your car is worth $10,000 when it is totaled, full coverage pays $10,000 and you still owe $2,000. This is why gap insurance exists — it covers that gap. Gap insurance is optional and costs extra.
Does full coverage cover damage if I hit an animal?
It depends on how the damage happens. If an animal runs into you and causes damage, comprehensive insurance covers it. If you swerve to avoid an animal and hit a tree or another car, collision insurance covers the damage from the crash itself, not the animal. Comprehensive covers the animal strike; collision covers what you hit while avoiding it.