Comprehensive insurance is a policy that, if stolen or damaged in an incident that is not an accident, helps pay to replace or fix your car. Usually, comprehensive coverage, also called “other than collision” includes damage from fire, vandalism or falling items (like a tree or hail). Your lender probably wants comprehensive coverage whether you’re financing or leasing your vehicle. It’s an extra coverage on your auto insurance policy if you own your vehicle outright.
You will want to suggest extensive coverage if you are looking for car insurance or are evaluating your current policy. Learn what comprehensive insurance helps secure, how it varies from collision coverage and how the coverage relates to restrictions and deductibles.
What does Comprehensive insurance cover?
Comprehensive assists cover damage to your vehicle that is not the result of a crash, such as:
- Vandalism
- Fire
- Natural catastrophes (like a hurricane or a tornado)
- Objects falling
- Damage done by animals to your car
- A Civil Disruption (like a riot that results in damage or destruction of your car)
What Is Not Covered By Comprehensive Insurance?
- Harm to your vehicle arising from a collision
- Damage to the car of another person from a collision
- In an accident, your (or your passengers’) medical costs
Deductible Of Comprehensive Coverage And Limitations
You can pick a fixed deductible when you buy comprehensive coverage, which is the amount you pay out of pocket for a covered claim. Let’s assume you want a deductible of $500, and in a covered lawsuit, your car is later destroyed by hail. You will pay the $500 premium if it took $1,500 to repair the vehicle and your insurer would cover the remaining $1,000.
There is a cap on comprehensive coverage, or the maximum amount that your insurance can pay for a covered claim. Usually, the cap on comprehensive coverage is the vehicle’s actual cash value.
For instance, if your car is stolen, the insurance provider will compensate you for the depreciated value of your car, less your deductible. In other words, in addition to using the insurer’s payout, if you chose to replace your stolen car with a newer make and model, you would definitely have to use some of your own money to do so.
Bear in mind that the extensive deductible and limit are distinct from the collision deductible and limit of your policy.
Choosing A Deductible Comprehensive Coverage
In fixed increments, like $500, $1,000 or $1,500, the insurer can give detailed deductible amounts. In general, choosing a higher comprehensive deductible means that your premiums will be lower, which can save money in advance. You will need to pay more out of pocket for a covered claim, however. Similarly, selecting a lower comprehensive deductible means it would raise the price you pay for coverage. You will be helped by your agent to decide what deductibles and limits suit your needs.
What is the difference between comprehensive insurance and collision?
If it’s damaged in a collision with another vehicle or object, such as a fence, collision coverage helps pay to fix the car. Generally, as a driver gets into a car accident, crash coverage comes into play.
A separate crash coverage is a comprehensive one. It helps cover various forms of damages, such as burglary, hail or falling trees, that are usually not the result of driving the car.
Why purchase extensive coverage? Why buy full coverage?
Here are a few considerations if you’re wondering whether you can buy extensive coverage:
Comprehensive coverage by the lender of your car might be needed
If you are leasing or financing your car, once the vehicle is paid off, the lender will require you to have comprehensive and collision coverage.
How old is your vehicle and what’s it worth?
Comprehensive coverage is optional if you have paid off your vehicle. Finding out the Kelley Blue Book worth of your vehicle might be a smart idea. If it was stolen or destroyed in an accident, will you be able to pay that amount to fix or replace your vehicle? If you can’t afford to spend a lot out of pocket, it could be a wise investment to obtain optional coverage, such as extensive coverage and crash coverage.
How much are the extensive and collision coverage annual premiums?
The Insurance Information Institute recommends that for comprehensive and collision coverage, you take the amount you will pay in one year, and multiply that number by 10. Is less than that number worth your car? Then it may not be a cost-effective choice for you to cover extensive and collision coverage. In other words, you might want to speak to your insurer about whether it makes sense to have such insurance coverage in your car insurance policy.