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Full Coverage Auto Insurance: Who Is It Really Made For?

Updated: November 18, 2018

What is full coverage auto insurance? The phrase itself is a little misleading, because there is no such thing as “full coverage” in auto insurance.

Typically, these are auto insurance policies that offer both comprehensive and collision coverage.

When someone is trying to purchase auto insurance, they probably see so many advertisements talking about the best cheap full coverage insurance policy.

It is important to read the fine print to ensure that both collision and comprehensive insurance coverage are present in this policy.

Beyond those elements, the buyer has to ask for the inclusion of other policy terms in their insurance.

What Does Full Coverage Auto Insurance Mean?

While companies usually add the words “full coverage auto insurance” in order to make their policy sound more appealing, the words have a slightly different meaning.

When a customer speaks with an insurance agent, and they mention getting full coverage, the agent assumes they want liability, comprehensive and collision insurance coverage.

Simply getting a basic full coverage auto insurance policy does not mean the insured individual is completely protected from any type of damage or injury that occurs in relation to the vehicle.

Instead, full coverage auto insurance means that the policy includes both comprehensive and collision coverage, in addition to the mandatory liability coverage that all cheap auto insurance policies must include.

When a customer calls or speaks with an insurance agent in person, and they mention getting full coverage, the agent assumes they want liability, comprehensive and collision insurance coverage for their car.

It is important to keep in mind that full coverage auto insurance does NOT mean that everything is covered in the policy. If there are any additional types of insurance that are important to an individual, they must speak with the insurance agent about them separately.

What is NOT Present in a Full Coverage Auto Insurance Plan?

A basic full coverage auto insurance policy is unlikely to include uninsured motorist coverage, unless you live in a state that legally requires this element. Similarly, medical or PIP coverage is only included in legally mandatory states.

It is unlikely that a full coverage auto insurance policy says anything regarding reimbursement for rental cars or insurance for these vehicles.

The best cheap full coverage insurance policies only include an optional death benefit by default in certain states. Coverage for custom parts and equipment is available with some vendors, but it is important to ask before committing to a long-term contract.

It is unlikely that a full coverage auto insurance policy says anything regarding reimbursement for rental cars or insurance for these vehicles. If someone plans on using rental cars on a frequent basis, it is a good idea to ask about including this element in the full coverage policy.

Another important feature missing in a lot of full coverage policies is roadside assistance or towing coverage. While many drivers get around this by getting AAA, or similar services, you might want to have this included in the policy in case of an emergency.

Ask Specifically About Certain Elements of the Policy:

The only way to get an optimal insurance policy is to ask questions before committing to any long-term deals. Research the different elements that make up auto insurance policies and decide what coverages are the most pressing concerns.

For inclusions such as optimal death benefit, medical coverage and uninsured motorist coverage, do some research regarding state laws.

It is never a good idea to assume that certain types of coverage are included in a policy, even if it is advertised as full coverage auto insurance. While the best agents are able to assess a client’s most important insurance needs, it is never a good idea to leave something so important to chance.

Even the best cheap full coverage insurance policy will have holes. For some people, those holes are not an issue. However, others may find that they required more coverage, but they did not ask the right questions before agreeing to a policy.

For inclusions such as optimal death benefit, medical coverage and uninsured motorist coverage, do some research regarding state laws.

If the state of residence requires those benefits, all full coverage policies will include them. If they are not legally required, it is best to assume they are not included.

Who Benefits from Full Coverage Auto Insurance?

Anyone who has their car through an auto loan will need full coverage auto insurance. Almost all banks and credit unions require this type of insurance attached to the car if they are going to approve a car loan.

Everyone wants to pay as little as possible for insurance, but full coverage auto insurance can save you money in the long-run.

While cheap auto insurance is a great way to save money, those with a loan to worry about must ensure that collision and comprehensive coverage is built into their plan.

The collision coverage will ensure that any damage to the vehicle during an accident is paid through the policy. This is very useful for anyone who is on the road a great deal, because the chances of getting in an accident increase with more time spent driving.

Meanwhile, comprehensive coverage applies to anything that happens to the vehicle while it is not on the road. If someone is living in an unsafe neighborhood, or a part of the country where heavy rain, snow or wind is common, it is a good idea to have this coverage included in any cheap auto insurance policy.

Everyone wants to pay as little as possible for insurance, but full coverage auto insurance can save you money in the long-run.

When Does a Person NOT Need Full Coverage Auto Insurance?

The answer to this question depends a great deal on a person’s individual circumstances. If someone has the financial means to afford full coverage auto insurance, or it is required by law or a car loan contract, it is best to go with this type of policy.

If money is tight and full coverage is not a necessity in your situation, simply getting the minimum required liability coverage is a solid option.

However, not all circumstances are the same. If money is tight and full coverage is not a necessity in your situation, simply getting the minimum required liability coverage is a solid option.

In addition, people who have older cars may not think that comprehensive and collision coverage is worth the money.

One rule of thumb dictates that when the yearly cost of comprehensive and collision coverage exceeds 10 percent of a car’s value, it is time to strip them from the policy and stick to liability insurance.

But it is important to keep in mind that there is always a risk associated with eliminating comprehensive and collision coverage. While it is statistically acceptable to eventually limit yourself to liability coverage, there is no way to predict if or when you will get into a bad accident.