Glossary

Full coverage

Informal shorthand for a policy combining liability with collision and comprehensive, the mix lenders usually require. It is not a defined policy type.

Also called: full coverage car insurance, full cover

Full coverage is not an official insurance term or a type of policy. It is shorthand that insurers, agents and lenders use for a policy combining liability coverage with collision coverage and comprehensive coverage, so it pays for damage you cause to others and for damage to your own car. Depending on the state, it also includes required coverages such as personal injury protection or uninsured motorist coverage.

Lenders and leasing companies usually require it, with deductibles no higher than a set amount, until the car is paid off. Many owners keep it afterward, especially on newer or valuable cars.

The name leads people to think everything is covered. A "full coverage" policy can still carry low liability limits, and it does not include rental reimbursement, roadside assistance, gap coverage or new car replacement unless you add them. Personal items in the car, mechanical breakdown and wear are not covered. When comparing quotes for full coverage, make sure each uses the same liability limits and deductibles. On an older car, dropping collision and comprehensive can make sense once their cost approaches what they could pay out; the Should I drop full coverage? calculator can help you decide.

Last reviewed October 4, 2026

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Related terms

Collision coverage Pays to repair or replace your own car after it hits another vehicle or object, or rolls over, regardless of fault, minus your deductible. Comprehensive coverage Pays for damage to your car from causes other than a crash, such as theft, fire, hail, flood, falling objects, vandalism or hitting an animal. Liability coverage The part of a car insurance policy that pays for injuries and property damage you cause to others, plus your legal defense, up to your limits. Minimum coverage The least car insurance a state lets you carry to drive legally, usually liability coverage at set limits and sometimes PIP or uninsured motorist coverage. Gap insurance Pays the difference between a totaled car's actual cash value and the larger balance still owed on its loan or lease. Lienholder The bank, credit union or finance company with a legal claim on a financed car until the loan is paid off, usually named on the insurance policy.

Related guides

The average cost of car insurance, and what the numbers mean The official U.S. average was $1,282 per vehicle in 2023 (NAIC); AAA put full coverage at $2,098 in 2026. What each figure means and how to estimate your own. How to read car insurance rate studies and average-cost claims Why "average cost of car insurance" figures disagree, what NAIC, BLS, AAA and quote-based studies each measure, and a checklist for judging any rate study. Insurance requirements for a financed car Why lenders require collision and comprehensive, how the lienholder is listed, what force-placed insurance costs, and what changes after payoff. State minimum vs full coverage: which do you need? How state-minimum car insurance differs from "full coverage," what each pays after a crash, and a simple test for deciding which one fits your car and finances. What full coverage car insurance actually means Full coverage is not an official policy type. Here is what the term usually includes, what it still leaves out, and when dropping it makes sense.

Related tools

Should I drop full coverage? calculator Weigh what collision and comprehensive cost each year against the most they could ever pay on an older car, using the 10% rule of thumb.