Full Coverage Car Insurance Guide

The difference between liability and full coverage is that liability insurance only covers other people's injuries and vehicle damage for accidents you cause, while full coverage also covers your own vehicle. Liability insurance is required in most states, while full coverage is only required if you lease or finance a car.

Key Things to Know About Liability vs. Full Coverage Car Insurance

• Full coverage car insurance costs an average of $1,997 per year.
• Liability car insurance costs an average of $720 per year.
• Full coverage includes collision and comprehensive insurance, while liability coverage does not.
• With liability-only insurance, you'll be on the hook for your own expenses after an accident.
• You should purchase full coverage insurance if you can afford it.

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Full coverage insurance costs $1,997 per year or $166 per month, on average. Full coverage car insurance is more expensive than the legal minimum auto insurance coverage because full coverage usually includes collision and comprehensive insurance as well as the minimum coverage required by a state.

The cost of full coverage car insurance varies based on the state, the driver's chosen coverage limits, the driver's risk factors, and the vehicle's value. Additionally, comprehensive and collision insurance are subject to a deductible, and drivers can select a higher deductible in return for a lower premium. Drivers can also minimize the cost of full coverage car insurance by comparing rates and checking for discounts.

Cheapest Full Coverage Insurance Companies

1. Esurance - $1,548 per year
2. Geico - $1,675 per year
3. Mercury - $1,919 per year
4. USAA - $2,002 per year
5. Progressive - $2,016 per year

Full coverage car insurance covers collision damage regardless of fault, non-accident damage caused by things like weather or vandalism, and liability for other people's injuries or property damage. Full coverage car insurance usually consists of at least liability, comprehensive, and collision coverage.

What Common Components of Full Coverage Car Insurance Cover

Since some states require more types of coverage than others, the exact standards for “full coverage” insurance differ. Most states require all drivers to have a minimum amount of liability insurance, but some states have requirements for personal injury protection or MedPay, too. Some also require a specified amount of uninsured/underinsured motorist coverage.

To learn more, check out WalletHub's guide to full coverage insurance.

It is definitely worth it to have full coverage on your car if the vehicle is leased or financed, when full coverage is typically required. Full coverage also is worth it if the total premium for collision and comprehensive coverage is less than 10% of the car's value, or if you can't afford to replace the car without it.

Full coverage car insurance costs an average of $1,997 per year, compared with $716 for a policy that only fulfills the state's minimum coverage requirements. That's a big difference, but you also have to consider that you will need to pay out of pocket to repair or replace your car if it is damaged in an accident that you cause and you don't have full coverage. The average new car costs almost $40,000.

As a result, full coverage – a policy that includes collision and comprehensive insurance as well as whatever coverage is required in your state – is a good investment for most drivers. But if your car is not worth much and you could afford to buy a replacement or live without it, full coverage might not be worth it.

For more information, check out WalletHub's complete guide to full coverage insurance.   

Full coverage insurance is an insurance policy that protects your vehicle from accident-related and non-accident-related damage, ensuring you are covered regardless of fault. Full coverage insurance often consists of collision insurance, comprehensive insurance, and at least the minimum coverage required by state law.

“Full coverage” is a term that is more commonly used by consumers than actual car insurance companies. Because of this, there are some varying definitions.

Common Definitions for Full Coverage

• Policies that include liability, collision, and comprehensive coverage
• Policies that have the state-minimum insurance plus any coverage required by a lender or lessor
• Policies that provide anything more than the minimum required liability coverage
• Policies that cover anything and everything in the event of an accident

Although the definition of full coverage insurance may be different depending on whom you ask, the definition shouldn't matter too much. You should always decide what car insurance to purchase, and how much, based on your own individual coverage needs as well as your budget.

Full coverage insurance costs can vary wildly depending on your state and what car you drive, since coverage types like collision and comprehensive are based on a car's actual cash value. To learn more, check out WalletHub's guide to full coverage car insurance and compare the cheapest full coverage car insurance companies.

Liability insurance is 64% cheaper than full coverage, on average. Liability car insurance costs an average of $720 per year, while full coverage car insurance averages $1,997 per year, according to WalletHub data for 2021. The exact cost difference between liability and full coverage insurance depends on factors such as the driver's state, vehicle, and driving history.

Full Coverage vs. Liability Insurance Cost by Company

Note: Rates reflect average annual costs in California.

Why Full Coverage Is More Expensive Than Liability Insurance

Full coverage insurance is more expensive than a liability-only policy because it offers broader protection. Liability insurance only pays for other people's repair expenses and medical bills after accidents that you cause. On the other hand, full coverage includes liability insurance plus collision and comprehensive coverage, which pay to repair or replace your vehicle after an accident or other damage-causing event.

To learn more, check out WalletHub's guide to liability vs. full coverage insurance.

The difference between comprehensive and full coverage is that comprehensive insurance is just the part of full coverage that covers damage to a car from things other than accidents, like theft or fire. Full coverage usually means a car insurance policy with comprehensive, collision, and the state's minimum requirements.

Comprehensive insurance mostly covers events outside of a driver's control, or incidents that happen when a car is parked. For instance, comprehensive covers vehicle damage or replacement due to natural disasters, extreme weather events, and vandalism. When combined with collision insurance, these two types of insurance cover most incidents that could damage your car, hence the designation “full coverage.” Comprehensive and collision coverage are not mandatory in any state, but some lenders and lessors will require them on a leased or financed car.

Since every state has different car insurance requirements, full coverage can also include several other types of coverage. For example, personal injury protection (PIP) and MedPay are required in certain states, and would therefore be included in full coverage in these locations.  

Finally, remember that even a supposedly full coverage policy will not cover everything. Things like rental car reimbursement while your own car is being repaired or replaced are available separately and aren't usually included in the term full coverage.

When shopping for insurance, it's best to look past labels like full coverage and instead consider your state's laws and your own financial situation. And if an insurance agent or broker offers to sell you full coverage, be sure to clarify exactly what's included.

You should drop full coverage insurance on your car when the cost of the insurance equals or exceeds the potential payout, should a covered event occur. You may also want to drop full coverage if you are willing to pay for repairs out of pocket, or if you would prefer to replace your vehicle if it's damaged. 

For example, an older car with high mileage may not be worth costly repairs, and you might want to save for a new car instead of paying for extra insurance. Similarly, a driver who uses their car infrequently might take the gamble of dropping full coverage, since they are statistically less likely to damage their vehicle.

You should consider dropping full coverage car insurance when...

• Your car is old or has a lot of miles. The less valuable your car is, the less likely it is that you need much coverage beyond your state's requirements. A good rule of thumb is that when your annual full-coverage payment equals 10% of your car's value, it's time to drop the coverage.
• You have a big emergency fund. If you don't have any savings, car damage might leave you in a severe bind. In that case, the money you spend on full coverage insurance will protect you from insurmountable repair bills. Consider keeping your full coverage insurance until you have some savings built up.

For those who aren't quite sure what it means exactly, “full coverage” is a catch-all term for insurance that covers you, other drivers, and your vehicles. It generally includes both collision and non-collision insurance. In other words, there is no single policy for "full coverage" car insurance. Instead, you select a combination of coverages that you feel is enough to handle all aspects of a car collision. With a well-rounded collection of coverages, you are “fully” protected from a variety of vehicular hazards, ranging from injuries and collision damage to weather events, encounters with wildlife, and vandalism.

However, it's important to remember that different states require different levels of coverage. Make sure to check state requirements before making any changes to an insurance policy.

With that being said, it's wise to get full coverage for a new, rare, or expensive car. A $40,000 truck is worth the few hundred dollars a year for full coverage insurance, for example. Otherwise, you run the risk of having to drop another $40,000 on a new truck if you're involved in a serious accident.

You need full coverage if your car is leased or financed. Full coverage car insurance is not required by law, but lenders and lessors generally want it, and it is a good idea to maintain full coverage if you cannot afford to repair or replace your car in the event of a total loss.

How to Decide if You Need Full Coverage

You should consider your car's value and your location when deciding if you need full coverage. If you own your car outright but it's particularly valuable, your full coverage premium is likely a good investment compared to the car's worth.

Similarly, even if you could afford to repair or replace the vehicle, it's smart to keep full coverage if you live in an area with frequent collisions or thefts. After all, full coverage usually refers to a policy that includes collision and comprehensive coverage in addition to the state's minimum required insurance.

If you are trying to save on your premium but cannot drop full coverage, you might be able to raise your deductible, as long as it isn't dictated by your insurer or lender. But bear in mind that you should always choose a deductible that you'll be able to afford in the event of a claim.

Yes, you need full coverage on a financed car. Any reputable lender will require drivers with a financed vehicle to purchase comprehensive and collision insurance, in addition to the state's minimum required car insurance coverage. Your contract with the lender might even require you to choose a specific deductible to ensure that you will be able to pay it if you file a claim.

Why You Need Full Coverage on a Financed Car

Full coverage is required on financed cars to protect the lender's investment. This applies regardless of whether the vehicle is new or used.

When buying full coverage insurance for a car with a loan, you should notify your insurer that the car is financed, because your lender will need to be listed on the policy. As a result, your lender will be notified when your policy expires, is renewed, or is canceled. When your loan ends, you can notify your insurance company in order to have your lender removed from the policy.

Other Key Things to Know About Full Coverage on Financed Cars

If you purchase full coverage and then fail to maintain it, your lender may be able to purchase expensive force-placed insurance or even repossess your car. The good news is that having an auto loan is not considered a risk factor for insurers, so the loan itself will not increase your insurance premiums. Full coverage is more expensive than maintaining only your state's mandatory minimum coverage, though.

You can find affordable full coverage by checking out WalletHub's page on cheap car insurance and our guide to car insurance discounts.