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What Is Full Coverage Car Insurance?

There is no official "full coverage" policy, according to the NAIC. Here is what people usually mean, and what the label can leave out.

5 min read · Last reviewed 2026-10 · 2 cited sources · Published by Simple Insurance Guide · How we verify

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Key takeaways

  • The NAIC, made up of state insurance regulators, says there is no such thing as a "full coverage" auto insurance policy.
  • People usually mean liability coverage plus collision and comprehensive coverage.
  • Collision and comprehensive are not required by law, but lenders often require them on a financed or leased car.
  • "Full coverage" still has limits, deductibles and exclusions, so compare those, not the label.

The short answer

The National Association of Insurance Commissioners (NAIC), whose members are the chief insurance regulators in every state, says there is no such thing as a "full coverage" auto insurance policy.

When people use the phrase, they usually mean a policy that combines liability coverage with collision and comprehensive coverage. The label is shorthand. It is not a promise that everything is covered.

What the phrase usually includes

Coverages people usually mean by full coverage
CoverageWhat it pays forIs it required?
LiabilityInjuries and property damage you cause to others, and the cost of a lawyer if you are sued.Required in nearly every state. State law sets the minimum limits.
CollisionRepairs to your car after a collision with another car, an object or a pothole.Not required by law. Lenders often require it.
ComprehensiveDamage to your car that is not caused by a collision. The NAIC also calls it "other than collision."Not required by law. Lenders often require it.

What the label can leave out

  • Limits. Liability pays only up to your limits, and if damages are higher you can be responsible for the rest.
  • Deductibles. You pay your deductible on a collision or comprehensive claim before the insurer pays.
  • Exclusions and conditions. Every policy lists what it does not cover.
  • Extras such as rental car coverage. The NAIC notes that in some states rental coverage falls under comprehensive and collision, and that this varies.
  • The loan balance. If you owe more than the car is worth, GAP insurance is a separate product.

Questions to ask before you buy

The NAIC suggests asking these questions of an agent or insurer:

  • How much liability coverage should I buy?
  • How much would it cost to buy more than the minimum?
  • Do I need collision and comprehensive coverage?
  • What deductible should I have for each?

Do you need it?

The NAIC says you should buy as much liability coverage as you can reasonably afford, because the state minimum may not cover a serious accident. Collision and comprehensive protect your own car. If you finance or lease it, the lender will probably require them. If you own it outright, the choice depends on how much damage to your car you could pay yourself. Check your state's page for its own rules.

Common mistakes

  • Assuming "full coverage" means you pay nothing after an accident.
  • Comparing quotes that are labeled full coverage without comparing the limits and deductibles.
  • Keeping only the state minimum liability limits without thinking about a serious accident.

General information only. It is not insurance, legal or financial advice. Rules and dates change and differ by state and plan, so confirm details with the official source, your insurer or your state agency.

Questions

Is full coverage required by law?

No. State law generally sets minimum liability coverage. Collision and comprehensive are not required by law, though lenders often require them on financed or leased cars.

Does full coverage cover everything?

No. Every policy has limits, deductibles and exclusions, and the NAIC says there is no such thing as a full coverage policy.

Is full coverage the same as comprehensive?

No. Comprehensive covers damage not caused by a collision. What people call full coverage usually combines liability, collision and comprehensive.

Sources

Informational only. Rules and policy terms change and differ by state and insurer. Confirm details with your policy, your insurer or your state insurance department.

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What Is GAP Insurance and Do You Need It?GAP coverage can pay the difference between what you owe on a car loan and what your insurer pays after a total loss. Here is how it works.
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