What Is the Meaning of Full Coverage Insurance?

Full Coverage is a Misnomer

The term "full coverage" may be misleading in that the term doesn't ultimately do what it suggests. A person with full coverage auto insurance may still have to pay certain dollar amounts for damages sustained to his vehicle during an accident. His vehicle may also sustain a level of damage which his insurance company feels is not worth repairing and instead cuts him a check for the fair market value of the vehicle. This is hardly what a person might consider full coverage.

A full coverage insurance policy grants some manner of coverage in all six coverage categories---property damage liability, bodily injury liability, comprehensive, collision, medical/personal injury protection and uninsured/under-insured motorist coverage. Drivers may choose a policy with comprehensive coverage without collision but cannot purchase policies with collision without comprehensive. States only place requirements on minimum coverage standards for personal liability relating to bodily injury and property damage so consumers have a wide range of coverage options to choose from when selecting full coverage insurance. Insurance companies also sweeten the pot for those consumers who purchase full coverage insurance with benefits like 24-hour roadside accident assistance and guaranteed vehicle repairs.

No state in the U.S. requires any driver to have a full coverage insurance policy. If you financed your vehicle, though, your insurance company or lender may require you to purchase full coverage. This is to protect the investment while it's still in repayment and since you don't ultimately own the car yet.

Full coverage insurance can provide protection for your car when minimum coverage auto insurance isn't enough. A full coverage insurance will cover a vehicle damaged due to weather, theft and collision with something other than a vehicle where a minimum coverage policy will not. For example, if your vehicle slams into a telephone pole resulting in a broken radiator, your full coverage insurance policy can cover the damage under its collision policy. A minimum coverage policy is of no help in such a case.