Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati....

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Feb 29, 2012

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Insurance is rarely a straightforward purchase. Laws change year to year and from state to state. If you are not offered substantial discounts for loyalty, it makes little sense not to shop around for your coverage from term to term. Even if you do get these discounts, it is still worth it to investigate other coverage and premiums before locking into a policy. If you are unsure of the level of coverage that you need, you can easily be talked into buying more insurance than you need. Before calling for quotes, it is important to know what your state minimums are, what protections you might need and might be required to have and, of course, you might ask what does full coverage insurance cover.

Legal Requirements Are Not the Only Consideration When Choosing Coverage

In 48 of the 50 states, there is a state level requirement for a minimum amount of insurance. That amount varies from state to state, however. The protection that this policy gives to you can also vary. In no state is “full coverage” insurance required. Other things to keep in mind:

  • While two states do not require a minimum insurance policy to be in place, they both do require proof of financial responsibility in the event of an accident, which can be even more expensive than most forms of insurance.
  • If you have a lien or loan on the vehicle, your lien holder may require full coverage insurance to protect the asset until it is paid off.
  • If you are concerned about your ability to financially handle an accident or loss, it is important to consider full coverage insurance.

In one of the states that do not require minimum insurance, you have other choices including depositing at least $60,000 with the Department of Transportation. That state, Wisconsin, does not require liability insurance. In addition to the cash deposit, you can also file a bond with the state or simply buy insurance.

What Does Full Coverage Insurance Cover?

If you are required to carry this coverage or just want to increase your level of protection, you might be interested in knowing what is and is not covered. Full coverage insurance is actually comprised of three types of insurance coverage in one: liability, comprehensive and collision.

  • Liability insurance covers your financial responsibilities if you are involved in an accident with another person. This coverage only covers the other person’s injuries and property with zero coverage for yourself.
  • Collision insurance covers your vehicle as well as the other person’s vehicle in the event of a crash. It also provides medical coverage for anyone injured in the accident. Limit amounts vary depending on the policy that is selected.
  • Comprehensive insurance covers damages from everything beyond an accident including animal damage, rocks or other objects, glass breakage, theft, vandalism and fire. This coverage will also pay for medical treatment if there are injuries from any of these events.
  • Full coverage insurance typically covers you in any vehicle that you might drive; however, the insurance carried on that vehicle would pay out before your own policy would be enacted.
  • It also covers others who would drive your car, provided that they are licensed drivers without any driving restrictions who have not been named on an exclusion list.

As with all types of insurance, there are limits that may be written into the policies that you have purchased. Always read your policy before you sign and make it effective so that you know what you have covered and what remains unprotected.

How Can There Be Limits if the Insurance Is Called “Full Coverage”?

There are always limits to insurance- including how much financial coverage is extended. Although you may have full coverage, you may not be fully covered. To be as protected as possible:

  • Choose enough coverage to pay for your legal liabilities- typically above the state minimum, which may not be nearly enough in the real world.
  • Understand what happens in the event of you have a loan on the vehicle that extends beyond the coverage that you are carrying on it. That would leave you without a vehicle but still having to make a payment on it and could also leave you open for legal actions because of it.
  • All insurance has limits- if you choose a limit of $30,000 for medical payments, for instance, you may have to pay the remainder of any bills that go above and beyond that amount. An injury that requires surgery, an extended hospital stay and then follow up therapy of any kind could easily be that amount and far more.

Full coverage is a blanket term, and like other insurance terms, it can be very confusing.