What is Comprehensive Coverage and What Does Comprehensive Insurance Cover?

Key takeaway

  • Comprehensive coverage directly pays for the damages your car bears from hail, storm, fire, and vandalism but does not cover damages caused by a collision.
  • Although comprehensive coverage is an optional coverage option from your vehicle insurance but your lender may need it
  • Comprehensive coverage is a good option for new model cars as old cars may require additional coverage and this will ultimately increase your overall cost.

Comprehensive coverage helps you pay for the replacement of your vehicle or repair the damage done to your car as a result of any reason other than collision. This is why comprehensive coverage is also referred to as “other than collision” coverage.

This simply means that it usually covers damages of falling objects like trees, damages as a result of vandalism, or fire. Although it’s an optional coverage option when it comes to vehicle insurance. Plus,  when you lease or finance your vehicle, your financer or lender would likely need comprehensive coverage.

Learn how comprehensive coverage protects your vehicle, the limits, and deductibles applied on the coverage, and how it is different from the collision coverage.

What does Comprehensive Insurance Cover?

Any damage to your car that was not caused by a collision with another vehicle. Examples of this include natural disasters such as hurricanes or earthquakes, fires, vandalism, theft, falling objects, among others.

How does Comprehensive Coverage work?

The example of a downed tree in your car is a good indicator of how comprehensive coverage would protect you. If the car suffers $ 6,000 damage, it is best to file a claim with your insurance company.

The comprehensive coverage of your policy will have a limit and a deductible. Here is what does comprehensive auto insurance cover?

The first is the maximum amount your insurance company will pay for a claim. This amount is usually the actual value of your car, which is calculated by subtracting the depreciation from its full value. The deductible is the amount you will pay from your bag when you file a claim, it can vary depending on the policy you buy.

Taking into account the above, if the actual value of your vehicle is $10,000 and you have a deductible of $500, you will have to pay that $500 from your bag and your insurance company will pay the remaining $5,500 to cover the $6,000 of damages caused by the fall of the tree in your car.

While the word “comprehensive” means total, complete, or all-inclusive, in this case, it does not mean that auto insurance offers complete coverage. To learn what does comprehensive car insurance covers, you need to add collision insurance to your policy. This coverage will help you pay for any damage resulting from being in a collision with another vehicle, regardless of who was at fault. On the contrary, comprehensive insurance will cover damages to your car caused by incidents that are not collisions and that are beyond your control.

comprehensive car insurance
source:automoblog.net

Why do you need comprehensive coverage and how to calculate it?

As mentioned earlier, comprehensive coverage is useful for new vehicles. This is because your vehicle value depreciates with time. Also, your coverage could not pay you more than the value of your vehicle minus your deductible. Therefore, if your financing or a lease contract doesn’t require it you can decide to refrain from having comprehensive coverage.

To understand the circumstances surrounding having or dropping the coverage you must figure out the value of your vehicle along with your deductible. If your comprehensive deductible is around $1,500 for a car worth $1,500 this means you’ll end up paying higher insurance rates which will not pay you back when you need it.

This is why you should see how much you will pay for your car’s insurance. If you’re paying more than your car’s worth in comprehensive coverage, the coverage is not going to benefit you in the long run.

So here’s how you can calculate it;

  • From your car’s value subtract the value of comprehensive deductibles.
  • Subtract the amount of comprehensive coverage from the amount you get for a six-month policy period. 

If;

  • Your answer is negative – you will end up paying more for comprehensive coverage than your car’s worth
  • Answer in small +ve number – comprehensive coverage may benefit you with a potentially lower claim amount.
  • The answer is large +ve number – the amount that you may not be able to gather in case of emergency, having comprehensive coverage will definitely make sense.

Should you include comprehensive Coverage in your Policy?

If you bought or leased a car, having comprehensive insurance may be required during the loan or lease. If you already own or have finished paying for your vehicle, comprehensive coverage will be optional.

If you are considering purchasing comprehensive insurance, a good place to start is to request quotes to find out how much it would cost you to maintain coverage per year. When you do, you will buy the cost of the policy with how much it would cost you to buy a new car if yours is unusable due to a strong hailstorm or if a deer hits your vehicle, as both situations would be covered by comprehensive insurance.

Should Accident and Comprehensive Insurance be purchased together?

While most drivers choose to have both, there are times when you can only purchase one. For example, if a car is parked and idle, it would make sense to protect it only with comprehensive coverage. However, when a vehicle is financed or leased, both are mandatory.

Incidents that cause damage to your vehicle can be frustrating, but it is much more annoying to have to pay a lot of money for an accident totally beyond your control. Consider including comprehensive coverage to your policy to protect your pocket from any unexpected accidents that could damage your car.

If you know how important it is to take care of your car and you want to be prepared for any mishap, then comprehensive insurance is what you need. Within your auto insurance policy, you will see that comprehensive insurance comes hand in hand with accident or collision insurance.

This is because the integral is responsible for covering more details that are not taken into account by the collision. When applying for comprehensive auto insurance or extended policy, the insurance agent may mention the option of including comprehensive coverage.

Pros and cons of the comprehensive coverage
source: automoblog.net

Does Comprehensive Insurance Coverage include?

This coverage includes support against situations such as the following:

  • Theft of the car. You take care of the expenses when you are the victim of your car theft. Even if it suffered from partial theft or was damaged by criminals.
  • Damage from natural disasters. The physical damage that the car can suffer from hail, storms, lightning, or more.
  • Dents. People who are learning to drive often stand in their car when parking or backing up. Comprehensive insurance can take care of this type of damage, no matter how small.
  • Broken glass and mirrors. Covers the cost of glass or mirrors that are broken after an accident. It doesn’t matter if they are on the roof or the windows.
  • Flood damage. If your city suffers from flooding and the car is exposed to this disaster, the insurance will cover your expenses.

What does Comprehensive Coverage not include?

Once you know what comprehensive coverage covers, you must consider what you should not involve yourself in because you are not covered in the following areas.

  • Collision damage with another vehicle
  • The expanse of legal remedies after a collision
  • Expanses of medical bills after a collision
  • Damages are caused after the collision of a solid surface such as a wall, pole, or fence.
  • Damages did by natural disasters depending on your location
  • Stolen items from your car
  • Damaged done by flooding (Flooding is covered by the optional add-on policy)

Pros and Cons of the Comprehensive Coverage

The basic purpose of comprehensive coverage is to prevent oneself from financial liabilities when your car gets damaged. However, having comprehensive coverage for your vehicle can have both advantages and disadvantages.

Pros of having a Comprehensive Coverage

  • Prevents you from getting additional debts for having wear and tear for your vehicle after minor damages such as hit by animal or glass damages.
  • Peace of mind
  • It can be even beneficial if you have a less expensive vehicle that raises your deductibles

Cons of Comprehensive Coverage

  • Comprehensive coverage providers say that everything is covered under it, but in reality, this is not the case.
  • Companies only sell a combination of combined collision coverage and comprehensive coverage because collision coverage costs way more than comprehensive coverage.

Is it mandatory to have Comprehensive Auto Coverage?

When applying for comprehensive auto insurance, comprehensive auto coverage is already included. If you buy a car from an agency, then you must keep your vehicle insured until the financing ends.

Comprehensive auto coverage is not required by law in most cities in the United States. However, it is highly recommended to purchase it if the car driver is learning to drive on the road. This allows you to maintain peace of mind in the face of any possible financial crisis that you may face after a car incident.

What is the main difference between Collision and Comprehensive Coverage?

Collision Coverage covers the amount of your car when it collides with another static object like a pole or fence. It also usually covers the damages when a car is hit by another vehicle. Basically, collision coverage plays its role when a driver meets with an accident, regardless of who is at fault.

On the other hand, comprehensive coverage covers the damages entailed by other kinds of losses which are rather different from collisions such as theft or damages that happened as a result of natural occurrences such as floods or fallen trees.

Here’s a comparison to both coverages:

FeatureComprehensive CoverageCollision Coverage
What’s Covered

Non-collision damages to a vehicle include:

Falling objects

Theft

Animal Damage

Natural Disasters

Fire

Damages to a vehicle as a result of:

Collision with another vehicle

Car roll-over accidents

Collision with a static object i.e. pole/fence.

Coverage LimitActual value of the damageActual value of the damage
DeductibleYesYes
Required/OptionalRequired if the vehicle is on lease or financed. In other cases, optional.Required if the vehicle is on lease or financed. In other cases, optional.
What’s not covered

Damage to other vehicles.

Any medical bills (yours, passengers in your vehicle, another driver, or passengers of other driver’s vehicle)

Damage to other vehicles.

Any medical bills (yours, passengers in your vehicle, another driver, or passengers of other driver’s vehicle)

 

What should you consider while purchasing Comprehensive Coverage?

If you are still wondering whether you should go for purchasing comprehensive or collision coverage, then here’s what you need to consider:

Your car’s lender may require a comprehensive coverage

If you’re having your car on leasing or financing, your lender may want you to have comprehensive coverage until the lease amount is paid off.

The worth of your car

If you are now the owner of the car after paying off the lease, then comprehensive coverage is just an option. It would be a better idea to know the current value of your vehicle. From this, you will be able to figure out if you would be able to replace your vehicle if it gets stolen or repair the damages if it gets into an accident?

If you negate all these questions, then having a collision or comprehensive coverage at your side will be absolutely a smart move for your vehicle and you both.

How much money do you have to pay for annual premiums for collision and comprehensive coverage?

The Institute of Insurance Information suggests that to make it feasible for yourself, you should take the amount of collision or comprehensive coverage that you can pay in one year and multiply it by 10. If the number you get is less than the worth of your car, then you should go for it. Otherwise, it would not be a cost-effective opportunity to look upon.

In simpler words, you should contact your insurance agent to know if you really need comprehensive or collision coverage for your car.

With comprehensive insurance, the car is protected against any type of unforeseen damage that is not included in the coverage for collisions or accidents. When applying for auto insurance, ask if it includes comprehensive coverage or if you must purchase it separately.

Frequently Asked Questions

If you have not taken out a loan for your car or your car is not on the lease, then taking comprehensive coverage is not necessary. Plus, if your car or vehicle doesn’t have much worth investing in this much coverage, then it doesn’t make sense financially to keep the coverage. You can also compare your car’s worth with the coverage you want to have with the deductibles and the amount you would pay for the rest of the period. If it doesn’t fall the same, you are investing in something that you don’t need.

Yes, once you get comprehensive coverage for your vehicle, it will replace your car if it gets stolen. Also, you will be given the actual amount of your car when it gets stolen. But without deductibles.

Your vehicle’s comprehensive coverage already covers you for the actual value of your car minus deductibles. This simply means that whether you need comprehensive coverage or not depends on the value of your vehicle and the amount of deductible that you would pay.

Generally, it is not possible to have comprehensive coverage alone. Every state regulates the minimum car insurance requirements that you have to purchase along with the comprehensive coverage. In some jurisdictions, you may also require to purchase collision coverage along with comprehensive coverage.

This means that whether you purchase comprehensive or collision coverage or not, you may have to purchase an insurance policy for your vehicle.

The data shows that about 7% of the progressive drivers raise comprehensive claims against their comprehensive coverage due to unforeseen natural damages. The average repair costs do reach up to $1,400 every year. Without comprehensive coverage, you are likely to pay around $1,400 for your repairs. Obviously, this also depends on the worth of the damaged spare parts and the worth of your vehicle. Expensive cars need expensive repairs and vice versa.

Conclusion

Sometimes it’s easy to mix up things when you are about to get comprehensive or collision coverage for your car. But you must need to understand that they both cover different things in different scenarios.

Collision coverage covers the cost you bore for the damages caused by accidents with other vehicles while comprehensive coverage every other damage of your vehicle other than collision. If a natural disaster occurs or an animal damages your car, then your comprehensive coverage will pay for the repair and replacements of your car. Moreover, it is not mandatory to have with your car insurance, but you can take the option if you are leasing your car and your lender wants the coverage.

Whatever you do, make sure to calculate your options to identify if having comprehensive coverage will benefit you in the future or not.

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