When you’re shopping for auto insurance, one option you’ll see is full coverage. While no auto insurance policy covers everything, full coverage offers significant protection if you’re involved in a car accident or your vehicle is damaged by weather, vandalism or another event.

Here’s what to know about full coverage car insurance, how it protects you financially, and whether it makes sense for you.

What does it cover?

Full coverage car insurance isn’t one type of coverage; it typically includes three coverages — liability, collision, and comprehensive insurance.

• Liability insurance comprises two coverage types: property damage and bodily injury liability insurance. Property damage kicks in if your car damages someone else’s property, such as their fence, mailbox or landscaping. The bodily injury component covers you if you hurt another driver or one of their passengers in an at-fault car accident.

• Collision insurance reimburses you for repairs to your own vehicle or replacement after an accident.

• Comprehensive insurance also covers the cost of car repairs or replacement, but there’s an important difference. Instead of kicking in after an accident, comprehensive coverage pays when your car is damaged due to an event like severe weather, burglary, vandalism or a fire.

While liability, collision, and comprehensive are common with full coverage insurance, you can add other coverage options to a full coverage policy. Some may even be mandatory, depending on your state requirements. Additional coverages include uninsured/underinsured motorist coverage, gap insurance, and rental car reimbursement coverage.

Here’s what each covers:

• Underinsured/uninsured motorist coverage: Protects you if the other party at fault in a car accident doesn’t have enough insurance to cover your medical bills, car repairs and other expenses.

• Gap coverage: Protects you if your car is stolen or totaled and your remaining auto loan balance exceeds your car’s depreciated value.

• Rental car reimbursement: If your car is damaged in a covered incident, this optional coverage helps out when you need to rent a car while yours is being repaired.

Does full coverage cover at-fault accidents?

Full coverage car insurance will offer some protection if you’re found at fault in an accident. Your liability insurance protects other drivers and their passengers in this case. And your collision coverage will cover the repair or replacement of your vehicle no matter who’s responsible for an accident.

But there are some limitations and costs to be aware of. Your insurance company will only provide coverage up to the amounts specified in your policy, known as coverage limits. For instance, if you have $25,000 in bodily injury liability insurance, but another party is seriously injured and their medical expenses exceed that amount, you’d likely have to pay the difference out of pocket.

Insurance deductibles also apply with collision and comprehensive insurance. Your deductible is the amount you pay before your insurance kicks in. Deductible amounts vary by policy, but it’s common to see $500 deductibles. So if your car’s damage totals $4,000, you’d need to pay $500 and your collision insurance would pay the rest.

Is personal injury protection or medical payments coverage included?

The answer: It depends where you live.

Personal injury protection, or PIP, is wide-ranging insurance that pays for your medical bills and other healthcare expenses, as well as lost wages, funeral costs, in-home health care, house cleaning or transportation needs related to a car accident, regardless of whether the accident was your fault.

Medical payments coverage, or MedPay, is similar: It covers your own injuries, or those of your passengers, no matter who is at fault in an accident. It also pays for medical expenses if you were injured as a pedestrian or in someone else’s car. But it doesn’t cover things like lost wages or childcare expenses.

PIP is required in 15 states, so in those places it’s included in full coverage. MedPay is required in only three states for drivers who opt out of standard coverage. It’s more typically an add-on.

Do I need full coverage auto insurance on my car?

Different states have different insurance requirements; nearly all require that you carry a minimum amount of bodily injury and property damage liability coverage. But none mandate full coverage.

That said, your lender may require collision and comprehensive if you’re financing your vehicle. Because your car serves as collateral for your auto loan, lenders want to ensure that collateral is protected in an accident.

You'll pay more for full coverage than a liability-only car insurance policy, but it also offers more peace of mind — and financial protection. For instance, if a large tree limb crushes your vehicle, the comprehensive insurance included with your full coverage policy would cover its replacement cost. If you had a liability-only policy, you’d have to pay for a new car out of pocket.

Is a full policy the right coverage for you? That depends on the age, make and model of your vehicle, as well as your risk tolerance. If you drive an older, low-value car, dropping to liability-only coverage could make sense if your full coverage deductible and monthly premiums exceed your car’s value. Likewise, if you don’t drive your older car often, the risk of damage to your car decreases, so having collision and comprehensive may not make sense.

Evaluate your preferred level of risk, your budget, and your insurance costs when determining if a liability-only or full coverage policy makes sense for your situation. Be sure to shop around for multiple car insurance quotes and ask for all available discounts to ensure you get the best rate.