What Is Comprehensive Auto Insurance?
With so many different types of insurance out there, deductibles to consider, and rates to compare, getting the right insurance for your vehicle can seem like learning to play the accordion. A perfect example is defining what exactly comprehensive insurance is, and to be even more precise comprehensive car insurance.
The mere mention of comprehensive as a separate type of insurance can have alarming connotations if you aren’t versed in insurance jargon, because may imply that your current coverage won’t stretch enough to cover each and every eventuality.
The truth is that if you are only carrying collision insurance and the liability auto policy required by law in your state this means that there are exceptions to what claims you will be able to run through your insurance company in the event of a mishap.
If this sounds confusing, you’re not alone. That’s why we’ve put together the best information to clear up all the questions you might have on comprehensive auto insurance.
What Does Comprehensive Insurance Cover?
As any car owner with state minimum insurance coverage will tell you after getting a claim for hail damage denied, your normal every-day car insurance policy may not cut it all the time. Comprehensive car insurance comes into play to protect your finances when you are victim to any number of hazards.
Comprehensive insurance pays for damage to your vehicle on covered costs that aren’t caused by a collision. And there’s a pretty long list of things that can damage your car that don’t result from a traffic accident.
Here are some examples of what kind of damage comprehensive insurance covers:
- Falling or flying objects – The most common types are fallen trees and airborne debris from hurricanes and tornados.
- Hail – Depending on where you live in the US, hail can wreak havoc on your car and cost big bucks to repair.
- Flood – Again geography plays a huge part here, but in many parts of the US flood damage is a huge risk to your car and home.
- Vandalism – Your state minimum will not cover damage to your car caused by vandalism whether it’s a key scratch in a parking lot or burst windows from a riot.
- Earthquakes – If you live in an area prone to earthquakes you will definitely want to make sure your insurance will cover the damage from tremors to “The Big One”.
- Fire – This includes engine, garage, arson and car accident fires. In addition, this extends to any damage caused by wildfires.
- Theft – If you really love your car or can’t afford to lose it, you’ll definitely want comprehensive auto insurance to reimburse you.
- Hitting Animals – Collisions with animals are treated in an entirely different way than those with other vehicles or roadway features.
What Does Comprehensive Insurance Mean?
In short, comprehensive insurance is what keeps you and your vehicle covered in any number of situations that don’t involve an actual accident, or when you are liable for damages towards other individuals and/or their property.
Comprehensive is typically part of a car insurance package that also includes collision and liability. Collision insurance pays for damage that occurs in an actual collision when you’re at fault, and liability coverage protects you from the risk of getting sued.
Taken together, these insurance bundles are what has come to be known as full coverage auto insurance, meaning you are covered for most foreseeable events.
It is important to remember that comprehensive and full coverage do not refer to the same thing.
So Who Needs Comprehensive Insurance?
Carrying comprehensive car insurance isn’t required by law, but if you are still paying off your car, or leasing one, your lender may require you to have it. On the other hand, if you own your vehicle outright, you’ll need to decide if comprehensive insurance is worth the added expense and how much coverage is enough.
If you don’t have enough savings to replace your car if it’s deemed a total loss, it’s important to have comprehensive coverage. But if repairing or replacing your vehicle wouldn’t be a financial hardship, then you might not need it.
Our pro tip is that you’ll definitely want it in most cases.
If you have an old car worth less than $1,000, comprehensive might not be worth the cost. That’s because the total amount you’d receive from a claim likely will be less than your premium.
The maximum amount you can receive from a comprehensive claim payout is the actual cash value of your vehicle at the time of damage.
You can also insure your motorcycle with comprehensive coverage.
How Much Does Comprehensive Cost?
How much you will pay for it depends on several factors, such as your age, geographic location, claims history and car value. These are exactly the same variables that affect any other auto insurance policy.
The average annual cost is just $132, according to the National Association of Insurance Commissioners.
Remember when shopping for insurance that NOT having a comprehensive policy could likely cost you money in the future due to the broad basket of damage it covers.
Things to Consider: Your Deductible
Your deductible — or the amount you agree to pay when you file a claim — is another major factor. Common deductibles are $200, $500 and $1,000 and the higher you go, the lower your overall monthly premium will be.
However, choosing a higher deductible could come at a cost. Always be realistic about how much you can pay out of pocket if you have an unexpected claim, and adjust your deductible accordingly.