Chances are you’ve heard about full coverage car insurance, but you might not be fully aware of what it actually covers or where you can find it. Here’s what you should know before deciding whether it’s right for you.

What is full coverage insurance?

Full coverage car insurance sounds great, but the term is a bit misleading. “Full coverage” generally refers to policies that include collision and comprehensive insurance — which actually cover very specific risks — in addition to liability insurance.

What does full coverage car insurance actually cover?

Many states mandate that drivers buy only a small amount of auto liability insurance. If you cause a crash, this coverage helps pay for the treatment of other people’s injuries and repairs to their property. But liability insurance won’t pay to repair your vehicle or cover incidents that don’t involve crashing into other vehicles or pedestrians. Collision and comprehensive insurance fill these gaps:

• Collision coverage pays for repairs to your car if you cause a crash with another vehicle or run into an object, such as a tree or a telephone pole.
• Comprehensive coverage pays to repair or replace your car if it’s stolen or damaged by a covered cause, such as an animal collision, weather, a falling object, fire or vandalism.

How much is full coverage car insurance?

Comprehensive and collision coverage give you much better insurance protection, but they also mean higher rates.

To get an idea of how much higher, Youautomotive sampled rates for liability-only policies and full coverage auto policies in three states: California, New Jersey, and Ohio.

 The price of full coverage car insurance isn’t chump change:

• Adding it raises Ohio car insurance rates by $362 per year — and that was the most affordable state we tested.
• It raises New Jersey car insurance rates by $606.

But just one comprehensive or collision claim can make the cost worth it. Replacing a stolen car or repairing your vehicle after a crash could mean paying thousands of dollars out of your own pocket if you don’t have the right insurance.

Where to buy full coverage car insurance

Full coverage is commonly available from any auto insurance company. We looked at average prices from the four largest car insurers for a policy that includes liability, collision, comprehensive, uninsured motorist bodily injury coverage and other state-required coverages where needed. State Farm was the cheapest option, on average.

Who needs full coverage car insurance?

If you finance your vehicle, your lender might require you to buy full coverage. Aside from that, comprehensive and collision are optional, although some insurers don’t let you add one without the other.

Comprehensive and collision coverage are particularly sound investments if:

• You have a new or expensive car.
• You regularly commute in heavy traffic.
• You live in a place with extreme weather, high car theft rates or a high risk of animal collisions.

However, the older your vehicle and the lower its value, the less benefit there is to have full coverage. Imagine it costs you $600 per year to add comprehensive and collision and you have a $1,000 deductible, which is the amount your insurer will subtract from a claim payment. If your car is worth only $2,000, the net value of a claim check would be $1,000 at most — so if you carry full coverage for more than a year, you won’t be able to get back more than what you paid. Checking your car’s current value at the National Automobile Dealers Association‘s website can help you decide whether full coverage makes sense.

Even with full coverage, there are other policy options you might need. For example, uninsured motorist protection, towing and labor service, and medical payments insurance all provide coverage that collision and comprehensive won’t.

How will various policy changes affect your rates? You can get insurance quotes using the Youautomotive tool and compare estimates to see for yourself.

Most of us need car insurance, yet few of us fully understand it.

Dozens of car insurance companies may be vying for business in your area, including nationwide players and local insurers. Each offers an eye-glazing assortment of policy options, making it hard to compare policies and figure out what is the best and cheapest car insurance.

If you are looking for the lowest prices, there are some guidelines worth following as you do your research. Here are eight things you can do to ensure that you’re getting the best coverage at the best possible rate.

1. Don’t assume any one company is the cheapest

Some companies spend a lot of money on commercials, trying to convince you that they offer the lowest car insurance rates.

The truth is that prices individuals will pay for the same coverage at the same company vary widely, and no single company can claim to be the low-price leader. The insurance company that’s cheapest for one person in one place might be the most expensive option for a driver in another state. Some insurance companies have also developed complex predictive models that may charge you higher rates if they show you are unlikely to switch providers. This practice, called “price optimization,” is banned in 16 states.

And there’s quite a bit of saving at stake: A recent NerdWallet analysis found a difference of $859 a year between the average insurance quote and the lowest available quote.

The only way to ensure you’re getting the best deal is to shop around.

2. Don’t ignore local and regional insurance companies

Just four companies control nearly half the nation’s car insurance business: Allstate, Geico, Progressive and State Farm. But smaller, regional insurers, such as Auto-Owners Insurance and Erie Insurance, often have higher customer satisfaction ratings than the big names — and they may have lower rates, too. NerdWallet can help you compare rates for companies that serve your area.

3. Check for discounts

Insurers provide a variety of discounts, including price breaks for customers who:

• Bundle car insurance with other policies, such as homeowners insurance
• Insure multiple cars with one policy
• Have a clean driving record
• Pay their entire annual or six-month premium at once
• Agree to receive documents online
• Own a car with certain anti-theft or safety features
• Are members of particular professional organizations or affiliate groups

Discounts vary by company and location. Check insurance company websites or consult with agents to find out which ones might apply to you.

4. Pay your bills on time — and not just your insurance bills

Your credit is a significant factor in the car insurance quotes you’ll receive — except in California, Hawaii, and Massachusetts, which don’t allow insurers to consider it. Insurance companies say that customers’ credit has been shown to correlate with their risk of filing a claim.

Improve your credit — and lower your premiums — by paying your bills on time and reducing your debt. Track your progress by checking your credit reports at least once per year.

5. Consider insurance costs when buying a car

You probably already pay attention to factors such as fuel efficiency and repair costs when deciding which car to buy, but you should also consider insurance premiums, which can vary between popular models. A NerdWallet review of rates for best-selling vehicles in 25 cities found that the Toyota Camry, for example, cost an average of $187 per year more to insure than the comparable Honda Accord. Similarly, a Toyota RAV4 cost an average of $201 more to insure than a Honda CR-V.

6. Skip collision and comprehensive coverage for your clunker

Collision coverage pays to repair the damage your vehicle receives in an accident involving another car or an inanimate object. Comprehensive pays to repair vehicle damage caused by weather, animals or vandalism or reimburses you for your car if it's stolen. But both will only pay up to the value of your car. If your older and has a low market value, it may not make sense to shell out for the two policies.

7. Consider raising your deductible

If you need to carry comprehensive and collision — because your car is a later model or your lender requires it — you can save a substantial amount of money by raising the deductibles. A NerdWallet study of rates in Florida and California found that customers who increased their deductibles from $500 to $1,000 saved about $200 per year on premiums, while those who increased them from $500 to $2,000 saved $362 per year. Keep in mind that this will mean you’ll pay more out of pocket if you do make a claim.

8. Consider usage-based plans, especially if you don’t drive much

If you’re a safe driver who doesn’t log very many miles, consider a usage-based insurance program, such as Allstate’s Drivewise, Progressive’s Snapshot or State Farm’s Drive Safe and Save. By signing up for these programs, you allow your insurer to track your driving electronically in exchange for possible discounts, based on how much you drive, when you drive and how well you drive.

If you drive less than 10,000 miles per year, you might be able to save money with a mileage-based insurance program, such as Metromile or Esurance Pay Per Mile. Metromile is currently available in seven states, while Esurance Pay Per Mile is only available in Oregon.