Explaining Comprehensive Car Insurance
Comprehensive Insurance
Comprehensive car insurance pays for losses that do not occur as a result of a road accident. Comprehensive insurance covers the repair of your vehicle if it is damaged due to incidents that are not related to driving or even on the road. For example, these incidents may include animals, falling objects, fires, vandalism, or even weather events. Comprehensive insurance will also help cover the costs of replacing your car if it is stolen.
What Does Comprehensive Insurance Cover?
Comprehensive car insurance only covers losses resulting from events that do not occur due to a natural collision with another vehicle or object, such as a fence or a telephone pole. Although the damage from “non-collision” hazards may seem extensive, comprehensive coverage has its limits. Some specific types of hazards include: animal encounters, such as a deer collision, broken or cracked windows or windshields, earthquakes, floods, hail, hurricanes, tornadoes, explosions, fires, smoke, falling objects, such as a tree branch, auto theft, stolen parts, or damage occurring during a vehicle break-in and vandalism, such as if someone eggs or scratches your car.
What Does Comprehensive Insurance Not Cover?
Comprehensive insurance does not cover damages resulting from collisions. This applies whether you collide with another car or with an object like a building, fence, or utility pole. To cover these types of damages, you need to purchase collision coverage. Comprehensive insurance also excludes damage caused by hitting a pothole in the road, as well as normal wear and tear on belts, brakes, hoses, tires, and wiper blades.
How Does Comprehensive Car Insurance Work?
Let’s say you step out of your house after a stormy night to find that a tree branch has fallen on your car’s roof, causing a huge scratch. Comprehensive insurance covers this type of damage, so you can file a claim and wait for your payout. Here are some key factors that will affect the process and payout.
Deductible
Comprehensive car insurance is subject to a deductible. Choosing a high deductible can help keep premium costs affordable, although it limits the amount you will receive if you file a claim. For example, if you have a $1,000 deductible and your car is damaged in a storm with repair costs of $1,500, you will have to pay $1,000 out of pocket for repairs, and the insurance company will only pay $500.
Actual Cash Value
Comprehensive insurance typically pays the actual cash value of the vehicle if it is stolen or totaled due to a covered peril, such as a flood. It is important to note that this is not the amount you paid for the car. The actual cash value is a way to arrive at a figure that reflects the current market value, or the amount someone might pay to buy your car at the time of the event.
Gap Insurance
Since cars depreciate sharply and quickly within their first five years, if your car is newly financed or leased, you may want to consider adding gap insurance. Many car dealers or lenders require it. If your financed car is stolen or totaled in the early years, the insurance compensation may be insufficient to pay off your car loan.
How Much Does Comprehensive Coverage Cost?
For most drivers, comprehensive insurance can be relatively inexpensive. Costs vary by vehicle and driver, with premiums averaging around $134 per year. Even windshield replacement can cost hundreds of dollars if you do not have coverage, and cracked windshields are common. Adding comprehensive insurance to your insurance policy can save you hundreds or thousands of dollars in certain types of repair costs.
Does
Do I need comprehensive insurance?
State laws do not require you to carry comprehensive auto insurance. However, most rental companies and lenders will require you to purchase coverage for leased and financed vehicles. Lenders won’t have much to say once you make your last payment on the car, but that’s up to you. You should consider your own situation to decide. If you can afford comprehensive insurance, it may still be a good idea. Also think about whether you can afford to buy another car if your car is stolen or totaled by a covered hazard. If you don’t have enough cash to buy a new car, or even a down payment, comprehensive insurance can provide good financial protection. To take it a step further, consider the role your car plays in your life now. Do you use it to commute to work? How much will it cost you to arrange alternative transportation if you lose it? Many personal factors can also be seen to influence your choice.
One way to help you decide
When considering comprehensive insurance, first assess the value of your car. Consumer sites like Kelley Blue Book can provide a value based on your car’s age, condition, location, mileage, make, and model. If your car is worth $2,000 or more, it may make sense to purchase comprehensive insurance. But once its value drops below $1,000, you may not need it, especially after considering the cost you will pay anyway to meet the deductible.
Comprehensive insurance vs. collision insurance
Many people feel confused because they have more than one type of insurance that applies to their car. The important thing regarding collision insurance and comprehensive insurance is that they do not overlap. Collision insurance pays for the repair or replacement of your car if it’s damaged or totaled in a collision with another vehicle or object. Comprehensive insurance covers losses not resulting from a collision that are caused by a specific set of hazards.
Collision insurance and comprehensive insurance scenarios
| Scenario | Collision Insurance | Comprehensive Insurance |
|---|---|---|
| Collision with an animal (wildlife or livestock) |  |
|
| Collision with another vehicle or object (fence, house, pole) | |
|
| Damage caused by earthquakes or floods or hail or hurricanes | |
|
| Damage caused by explosion or fire | |
|
| Damage caused by falling objects | |
|
| Damage caused by hitting a pothole | |
|
| Stolen parts | |
|
| Stolen car | |
|
| Damage caused by vandalism | |
Takeaway
Comprehensive car insurance covers stolen vehicles and damage from things other than collisions, such as vandalism or flood damage. State laws do not require comprehensive insurance, but a rental company or lender will require it if you are leasing or financing a car. Comprehensive insurance pays for the replacement value of broken glass, after the deductible, but some options allow you to get full glass coverage with no deductible.
Source: https://www.thebalancemoney.com/comprehensive-insurance-coverage-2645753
Leave a Reply