What is Comprehensive Insurance?

Comprehensive Insurance

Comprehensive insurance provides coverage that enables you to perform car repairs if your vehicle gets stolen or suffers damage as a result of an accident. The term comprehensive is often referred to as “other than collision” coverage due to the fact that it includes fire damages, fallen objects or vandalized property. 

When entering into a vehicle financing or leasing contract, most lenders will require you to purchase some sort of comprehensive coverage as a part of the insurance package. However, it is considered voluntary when you purchase a vehicle outright such as all cash. 

What Can Comprehensive Insurance Cover?

Comprehensive insurance covers situations that are non-collision based such as the following:

  • Vandalism – Intentional destruction or defacing of property
  • Theft – Taking of property without permission 
  • Fire – Often occurring as a result of a gas leak or wreck
  • Falling Objects – Unsecured items with substantial weight that can cause major damage
  • Natural Disasters – Flooding, hurricanes, tornadoes or other unforeseen weather events
  • Animal Damage – Injury, breakage, or defacement as a result of an animal
  • Civil Disturbance – Any damage as the result of a riot

What Damage is Not Covered By Comprehensive Insurance?

Although there are many situations in which comprehensive coverage will come into play when assessing the pricing for your vehicle repairs, there are certain instances that are excluded from coverage

  • Legal Fees – Court costs in relation to a lawsuit from an injury or other damages
  • Medical Expenses – Treatment required as a result of emergency care, surgery, or assessments
  • Collision Damage – Damage resulting from one car hitting another
  • Lost Income – Lack of wages due to inability to work after an accident
  • Stolen Property – Valuable items taken without permission from inside of a vehicle
  • Other Party Damage – Any damages caused to another vehicle as a result of a collision

Typically, any issues that are not covered by comprehensive insurance are directed towards other types of insurance such as collision coverage or paid for directly out of pocket.

How Your Comprehensive Deductible Works

Upon purchasing comprehensive insurance coverage, you will have the option of choosing a deductible. This amount will determine the cost that you are required to pay before the insurance policy will cover any damages against your claim. An example would be sustaining car damage that totals $2,000 based on repair estimates. If your deductible amount is set at $1,000, then you would be responsible for that amount in full before the insurance policy kicks in to cover the remaining $1,000 in vehicle repairs. 

Choosing a comprehensive deductible is based on the offered tier amounts. Some of the more common ones are either $500, $1,000 or $1,500 dollars. The higher your deductible amount that you choose then the lower your monthly premiums will cost you and vice-versa.

When considering the maximum allowable amount that comprehensive coverage will cover, it is important to note the actual cash value or appraised value of your vehicle at the time the incident occurs. This value is usually arrived at by insurance adjusters who assess the car for factors like damages, mileage, make or model, in addition to a few other criteria.

In a situation where the vehicle in question was stolen, the insurance company would only provide reimbursement for the car after subtracting the deductible amount from its inherent depreciated value. This amount would then be sent to you in a check, which can also be put towards an upgrade or model that costs in excess of the original vehicle.

Difference Between Collision and Comprehensive Insurance?

Comprehensive and collision coverage may sound similar however, the terms are not interchangeable. Collision coverage is used when payment for repairs caused by a car colliding with a stationary object such as a wall, or another vehicle altogether. Comprehensive coverage, on the other hand, is used to cover costs associated with damage that occurs independent of a collision. 

Comprehensive CoverageCollision Coverage
Covers theft, fires, objects, animals, and natural disastersCovers vehicle collision, rollovers, and stationary object collisions
Coverage limited to actual cash valueCoverage limited to actual cash value
Lender required during lease or financing termsLender required during lease or financing terms
Excludes other party vehicle damagesExcludes other party vehicle damages
Deductible selection allowedDeductible selection allowed
Medical bills excluded from coverageMedical bills excluded from coverage
Optional during cash purchasesOptional during cash purchases

Should I Get Comprehensive Insurance?

Comprehensive insurance can protect your vehicle and your finances in a variety of situations. For drivers who reside in areas that experience high rates of crime such as vandalism or thefts, having this add-on can provide extra protection when you need it most. People who live in coastal areas where hurricanes, tornadoes or wildfires occur frequently may also benefit from having comprehensive insurance to their policies to absorb the astronomical costs that can occur as a result of not having proper coverage.

Some things to consider when deciding whether comprehensive insurance is right for you are:

  • Is it required by your lender under the terms of your leasing or financing contract?
  • The value of your vehicle at the time of receiving the insurance quote
  • The crime rates and population density of the area that you reside in

Frequently Asked Questions

Is Comprehensive Coverage the Same as Full Coverage?

Comprehensive insurance is not the same as full coverage. However, many lenders or insurance agents may refer to having full coverage when it is purchased alongside state-mandated coverage that specifies certain lifetime minimums that must be applied.

Should You Carry Comprehensive Insurance on an Older Car?

Carrying comprehensive insurance on an older car can protect you from a variety of costs associated with unforeseen damages that may occur. However, it is not recommended to carry this type of coverage once your vehicle has reached five or more years of age due to the value of the car when compared to the annual premiums amounts that you will be paying. 

When Should I Drop Comprehensive Insurance?

Comprehensive insurance coverage should be dropped in a variety of situations. Some of the most typical ones would be when the car has depreciated to the point that it would not be worth the coverage, the deductible is high compared to the costs of repairing the vehicle, or the mileage of the car is near the 100,000 mile marker.

Is Comprehensive Insurance Required?

Comprehensive insurance is not required by state or federal laws in general. However, as a condition of protection from the loss of value that may occur in an accident or other incident that may prevent reimbursement to an insurer, coverage is required when a vehicle is under lease or finance contract.

Conclusion

Purchasing car insurance is a decision that is equally important to buying a vehicle itself. In order to receive the best protections when it comes to your investment, you must weigh your decision carefully. Comprehensive insurance coverage can provide you with backup in the case of a catastrophe or fallout from a distracted driver. However, choosing the best coverage for you requires weighing the costs, requirements, and the benefits that the insurance can provide for you.

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