Full Coverage Auto Insurance: What It Actually Means (2025)

So “full coverage” isn’t actually a thing. It’s not an official insurance term. It’s not a product you can buy. It doesn’t appear anywhere in insurance industry regulations. It’s just a phrase people use that means different things to different people, and this confusion costs people thousands of dollars every year.

I cannot tell you how many times someone called me when I was adjusting claims, absolutely furious, because they had “full coverage” but their claim wasn’t being paid the way they expected. “I pay for FULL coverage! That means EVERYTHING is covered!” No, it doesn’t. Because “full coverage” doesn’t mean anything specific.

Let me explain what people usually mean when they say this, and more importantly, what they probably DON’T have that they think they have.

What “full coverage” usually means

When most people say “full coverage,” they mean they have liability coverage PLUS collision PLUS comprehensive. These three things together:

Liability—pays for damage you cause to other people and their property

Collision—pays to repair your car when you hit something

Comprehensive—pays to repair your car when something happens that isn’t a collision (theft, weather, vandalism, hitting a deer, etc.)

If you have all three of these, you have what most people would consider “full coverage.” Your liability protects others. Your collision and comprehensive protect your car. Good start.

But here’s the thing though—having all three of these does NOT mean you’re fully protected. Not even close.

What “full coverage” probably doesn’t include

Here’s all the stuff that’s NOT typically included in what people call “full coverage” but that you might desperately need:

Uninsured/underinsured motorist coverage (UM/UIM)—pays when someone without insurance (or without enough insurance) hits you. About 14% of drivers are uninsured right now. This isn’t optional coverage in my mind, it’s essential. But it’s not automatically included in most states.

Medical payments coverage (MedPay) or Personal Injury Protection (PIP)—pays for your medical bills regardless of who’s at fault. Without this, if you cause an accident and get hurt, you’re relying on your health insurance (which might have high deductibles and might not cover everything).

Rental reimbursement—pays for a rental car while yours is being repaired. If your car is in the shop for two weeks, can you afford $700-1000 out of pocket for a rental? Most “full coverage” policies don’t include this unless you specifically add it.

Roadside assistance—towing, flat tires, dead batteries, lockouts. Separate coverage. Not included.

Gap insurance—pays the difference between what your car is worth and what you owe on your loan if the car is totaled. Crucial if you’re financing and underwater on your loan. Not included.

See the problem? Someone with “full coverage” could get hit by an uninsured driver, have no UM coverage, be stuck without a car, have no rental reimbursement, and owe $5,000 on a loan for a car that no longer exists. But they thought they were “fully covered.”

A real example that still makes me sad

Had a claim come across my desk—woman with “full coverage” got rear-ended by someone with no insurance. Her car was totaled. She was injured—needed physical therapy for her back. Here’s what happened:

Her collision coverage paid the actual cash value of her car, which was about $12,000. But she still owed $16,000 on her loan. No gap insurance. She was $4,000 in debt for a car she no longer had.

She had no uninsured motorist coverage, so her medical bills had to go through her regular health insurance. Her deductible was $3,000 before health insurance kicked in. The physical therapy copays added up to another $1,500.

She had no rental reimbursement, so she had to rent a car out of pocket for two weeks while she figured out what to do. About $600.

Total out of pocket for someone who thought she was “fully covered”: over $9,000. Plus she still had to figure out how to buy another car while owing $4,000 on one that was crumpled in a junkyard.

This is why “full coverage” as a concept is dangerous. It makes people think they’re protected when they’re not.

What you actually need (my opinion)

Look, I’m gonna be real with you—I can’t tell you exactly what coverage you need because I don’t know your situation. But here’s what I personally carry on my 2016 Camry, and why:

Liability: 100/300/100—way above state minimums because state minimums are a joke and I don’t want to lose my house if I cause a serious accident

Collision: $500 deductible—low enough that I can afford it if something happens

Comprehensive: $500 deductible—same reasoning, plus I live in Oregon where deer are everywhere and hail happens

Uninsured/underinsured motorist: 100/300—matching my liability limits because I got rear-ended by an uninsured driver in 2021 and I never want to go through that without coverage again

Medical payments: $10,000—covers my medical bills in an accident regardless of fault, fills gaps in health insurance

Rental reimbursement: $40/day for 30 days—I need a car to get to work, can’t be without one

I don’t carry gap insurance because my car is paid off—no loan means no gap. I don’t carry roadside assistance through insurance because I have AAA already.

I also have a $1 million umbrella policy that sits on top of my auto and renters insurance. Costs me like $200 a year and gives me extra liability protection if someone sues me for more than my policy limits.

Is all this overkill? Maybe. But after six years of seeing what happens to people who thought they had enough coverage and didn’t, I’d rather be overinsured than underinsured.

How to know what you actually have

Pull up your insurance policy. Find the declarations page—it’s usually the first page or two, the summary with all your coverages and limits listed. Look for:

Bodily injury liability—what’s your limit per person and per accident?

Property damage liability—what’s your limit?

Collision—do you have it? What’s the deductible?

Comprehensive—same questions

Uninsured motorist bodily injury—do you have it? What’s the limit?

Uninsured motorist property damage—do you have it?

Medical payments or PIP—do you have it? What’s the limit?

Rental reimbursement—do you have it?

If you see any of these missing or you don’t understand what you’re looking at, call your insurance company and make them explain it. That’s their job. Ask specifically “what happens if an uninsured driver hits me?” Ask “what happens if I’m injured?” Ask “what happens if my car is totaled and I owe more than it’s worth?”

Make them walk you through the scenarios. Don’t just accept “you have full coverage” as an answer because that answer means nothing.

The minimum you should probably have

If I had to give a baseline recommendation for most people, it would be:

Liability: at least 100/300/100 (more if you have assets to protect)

Collision and comprehensive: yes, with deductibles you can actually afford to pay

Uninsured/underinsured motorist: YES, matching your liability limits

Medical payments: at least $5,000-10,000

Rental reimbursement: yes if you can’t afford to be without a car

Gap insurance: yes if you’re financing and put less than 20% down

Will this cost more than bare-bones “full coverage”? Yeah, probably. But it actually protects you against the things most likely to financially wreck you.

And this is where it gets stupid

The insurance industry could just… explain this to people. When you buy a policy, they could say “here’s what’s included and here’s what’s not, here are the gaps you might want to fill.” But they don’t. They let you check a “full coverage” box and assume you know what that means. They bury the important details in 40-page policy documents written in legal jargon.

I spent six years on the phone with people who genuinely believed they were protected and weren’t. That’s a failure of the system. The information is there if you dig for it, but normal people shouldn’t have to become insurance experts just to know what they’re buying.

So yeah. “Full coverage” isn’t a real thing. It’s a marketing phrase that makes you feel safe without actually making you safe. Figure out what you actually have. Figure out what you actually need. Don’t assume.

Comprehensive just laid an egg in the bushes instead of the coop, which is annoying but also kind of impressive because she’s been doing that thing where she pretends she’s not going to lay and then surprises you. Anyway. Check your policy. Make sure you actually understand what “full coverage” means for your specific situation. Because nobody else is going to make sure for you.