Full coverage is two separate policies bundled together: collision and comprehensive insurance, both with deductibles you choose
Full coverage does not mean your insurance pays for everything. It means you have collision coverage (pays for damage when you hit something or something hits you) and comprehensive coverage (pays for theft, weather, vandalism, and other non-collision damage), plus your required liability coverage. You still pay a deductible — usually $500 or $1,000 — out of your own pocket when you file a claim. The term "full coverage" is informal; your insurance company calls these specific coverages by their names.
Most people carry full coverage because their lender requires it. If you financed or leased your car, the bank or leasing company will not let you carry liability-only insurance. Once you own the car outright, full coverage becomes optional, though many owners keep it anyway because the cost of replacing a car can be catastrophic.
Key Takeaways
- Full coverage means collision and comprehensive insurance together, not a single policy that covers all damage.
- Your lender requires full coverage if you are financing or leasing; it becomes optional once you own the car outright.
- You choose your deductible, and you pay that amount out of pocket before insurance pays anything.
- Full coverage does not cover maintenance, wear and tear, or damage you cause to other people's property — that is liability insurance, which is separate.
What collision coverage actually pays for
Collision coverage pays to repair or replace your car if you hit another vehicle, a pole, a tree, a guardrail, or anything else stationary or moving. It does not matter whether the accident was your fault. If you cause the crash, your collision coverage pays your repair bill (minus your deductible), and the other driver's liability insurance pays for damage to their car.
The amount collision pays is capped at your car's actual cash value — what it would sell for today, not what you paid for it. If your car is worth $8,000 and repair costs are $10,000, collision pays $8,000 minus your deductible. If your car is worth $5,000 and repair costs are $10,000, collision pays $5,000 minus your deductible. This is called a total loss. At that point, the insurance company owns the car, and you receive the payout.
What comprehensive coverage actually pays for
Comprehensive coverage pays for damage that is not caused by a collision: theft, vandalism, weather (hail, flooding, wind), hitting an animal, broken glass, and fire. It also has a deductible and a cap at your car's actual cash value. If someone breaks into your car and steals your stereo, comprehensive pays for the damage to your car (the broken window, the damaged door frame) but not the stereo itself — that is a separate claim to your homeowners or renters insurance.
Comprehensive is optional if you own your car outright, but many owners keep it because a single hail storm or theft can cost thousands. If you live in an area with frequent severe weather or high theft rates, the cost of comprehensive is usually worth it.
How your deductible works
When you buy full coverage, you choose a deductible for both collision and comprehensive. Common choices are $250, $500, $1,000, or $2,500. The deductible is the amount you pay out of pocket when you file a claim; your insurance pays the rest (up to your car's actual cash value).
A higher deductible lowers your monthly premium. A $1,000 deductible costs less per month than a $250 deductible, but you pay more when you actually need to file a claim. Choose a deductible you can actually afford to pay if your car is damaged. If you cannot pay $1,000 out of pocket, a $500 deductible makes more sense, even if the monthly cost is higher.
What full coverage does not cover
Full coverage does not pay for routine maintenance, wear and tear, or mechanical breakdown. If your transmission fails or your engine needs repair, that is your responsibility. Full coverage also does not cover damage you cause to other people's property — that is liability coverage, which is required by law in every state and is separate from full coverage.
Full coverage also does not cover medical bills or lost wages if you are injured in a crash. That is what medical payments coverage (med pay) or personal injury protection (PIP) does, and you buy those separately. Some states require PIP; others make it optional. Full coverage does not include uninsured motorist coverage either, which protects you if someone without insurance hits you.
When you need full coverage and when you do not
You need full coverage if your car is financed or leased — your lender will require it as a condition of the loan. You also need it if your car is relatively new or worth a significant amount of money, because the cost of replacing it would be devastating.
Once you own your car outright and it is worth less than $5,000 or $6,000, full coverage may cost more than it makes sense to carry. If your car is worth $4,000 and your collision and comprehensive premiums total $80 per month, you are paying $960 per year for coverage that pays a maximum of $4,000 minus your deductible. If you can afford to replace the car yourself, liability-only insurance is a reasonable choice. If you cannot, keep full coverage.
How full coverage interacts with your other policies
Full coverage is separate from liability insurance, which is required by law and pays for damage you cause to other people and their property. Liability is not optional; full coverage is. You can have liability without full coverage, but you cannot legally drive without liability.
Full coverage is also separate from medical payments coverage and uninsured motorist coverage. Some people buy all three; others buy only what their lender requires. Your insurance agent can explain what your state requires and what makes sense for your situation.
Frequently Asked Questions
Does full coverage pay for maintenance and repairs?
No. Full coverage pays only for damage from collisions, theft, weather, and similar events. Maintenance, wear and tear, and mechanical breakdown are your responsibility. If your brake pads wear out or your engine needs repair, that is not covered.
What happens if I get in an accident and my car is totaled?
Your collision coverage pays your car's actual cash value minus your deductible. The insurance company takes ownership of the car. If you still owe money on the loan, the payout goes to your lender first, and you receive any remaining amount.
Can I lower my full coverage premium?
Yes. Raise your deductible, ask about discounts (bundling, good driver, safety features), shop around with other insurers, and remove coverage you do not need once your car is paid off. Some insurers also offer usage-based programs that lower your rate if you drive safely.
Is full coverage worth it for an old car?
It depends on the car's value and whether you can afford to replace it. If your car is worth $3,000 and full coverage costs $100 per month, you are paying $1,200 per year. If you can replace the car for $3,000, liability-only may make financial sense. If you cannot, keep full coverage.
What is the difference between full coverage and comprehensive coverage?
Comprehensive is one part of full coverage. Full coverage means both collision and comprehensive together. Comprehensive alone covers theft, weather, and vandalism but not collision damage. Most lenders require both.