Key Takeaways: When you hear ‘full coverage’ auto insurance, you may think that it covers all types of situations.However, full coverage does not mean total protection and is a misleading term used in the auto insurance industry.From the marketing language used to undereducated consumers, confusion persists about what is really included in full coverage insurance.

When you are purchasing auto insurance, be sure to clarify inclusions and exclusions with your insurance agent so that you can ensure that you are totally protected in all situations.Let’s take a look at what full coverage insurance does and doesn’t cover so you can make smarter choices.Breaking Down What Full Coverage Means When it comes to auto insurance, context matters.

Full coverage insurance starts with a base combination of insurance policy types, e.g., liability, collision, and comprehensive insurance, rather than a standardized or all-inclusive policy.Each of these types of insurance provides different protection, including: Liability Insurance Liability insurance covers bodily injury and property damage that you cause in an auto accident.This does not include damage to your car or injuries you may sustain during the accident.

People with older vehicles that have little actual value will often opt for liability-only insurance coverage to save money and not over-insure a car that has little resale value.It can be a great way to save money if you own the car outright, but remember – in an accident, you walk away with nothing.Liability insurance is required in most states as the bare minimum coverage required.

A few states allow you to purchase a bond in place of liability insurance, which is intended to cover any expenses you incur in an accident.Check your state’s requirements .Collision Insurance Collision insurance pays for the repairs or replacement of your vehicle if it’s damaged in an accident.

It also covers accidents that may happen with an inanimate object, e.g., trees, poles, guardrails, etc.While collision insurance kicks in regardless of who is at fault, there will be deductibles and limits that apply to your policy.Also, if your vehicle is financed through a bank or leasing company, they may require collision (and comprehensive) insurance to protect their interest in the property.

Comprehensive Insurance Comprehensive Insurance covers all non-collision damage to your vehicle, e.g., fire, vandalism, theft, and weather-related or natural disasters.This also includes things like covering the damage sustained after hitting an animal or falling objects.Like collision insurance, comprehensive insurance is required by all first lien holders, e.g., banks, leasing companies, etc.

Full Coverage Gives a False Sense of Security People often expect that full coverage provides blanket protection, which is not the case.Depending on the insurance carrier, some common exclusions can include: While insurance companies try to provide transparency, it’s up to you as the consumer to research exclusions and alternatives to ensure you have the best possible coverage.Requirements Vary by State and May Not Be Adequate Minimum liability laws in each state are typically decided legislatively and can result in coverage inadequacies that vary dramatically from state to state.

Each state sets its own minimums for both bodily injury and property damage liability.In other words, with liability coverage being the foundation of a full coverage policy, what’s considered full coverage in one state might be grossly inadequate compared to another.For example: So, What Additional Coverages Should You Consider At a minimum, there are some basic coverages that you should include in your ‘full coverage’ policy, including: While normal wear and tear coverage is never covered, additional, less common coverage addendums might include: Is Full Coverage Worth It? It’s important to evaluate the cost vs risk when shopping for any type of insurance, and full coverage is no different.

Your decision will require balancing things like your financial situation, car age, and tolerance for risk.Full coverage makes sense for new and high-value cars, as well as any financed vehicles.But for older cars with low market value, liability-only insurance may suffice.

In most cases, full coverage is recommended, and the different add-ons will make sense depending on your particular financial situation and risk aversion.Consider Discounts to Offset Costs of Full Coverage Insurance and the Associated Addenda There are basically four categories of discounts available from insurance companies: driver history and behavior discounts, policy-based discounts, vehicle-based discounts, and driver status and affiliation discounts.Be sure to evaluate your discount opportunities when shopping for any type of insurance—it can be well worth your time.

Driver History and Behavior Discounts Policy-Based Discounts Vehicle-Based Discounts Driver Status and Affiliation Discounts Protect Yourself by Understanding Your Insurance Insurance selection is a big decision, and you want personalized insurance planning to find the best solutions for your financial situation.Find a reputable insurance agent and company that can provide you with targeted information that answers all of your questions, like “What does this policy cover and what does it exclude?” and “Can I save money on policy addendums through discounts?” Starting with a visit to a site like can set you on the right path to find a long-term partner that’s knowledgeable about the ins and outs of insurance.Final Thoughts Remember, ‘full coverage’ does not mean all-encompassing! Full coverage insurance provides a solid foundation but may require supplemental coverage to fill in any gaps.

By understanding possible exclusions and how adding strategic endorsements can expand your protection, you can gain true peace of mind for the long term.Life changes on a regular basis.Regularly review your insurance coverage and costs with a trusted insurance partner to guarantee you are well-positioned to absorb the unexpected.

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