Comprehensive Car Insurance 101
Comprehensive auto insurance helps cover unexpected damages that aren’t caused by a car crash.
Comprehensive car insurance is designed to take care of problems that fall outside the coverage limits of liability or collision coverages. Damage caused by natural disasters, falling objects and even animals is often included.
While comprehensive auto insurance is often included with collision insurance under the umbrella of "full coverage", they cover different perils. The age of your car is a good measure of whether you need comprehensive car insurance, but it usually winds up being a good investment regardless.
This article will go over:
- What comprehensive auto insurance covers
- Comprehensive car insurance exclusions
- Differences between comprehensive and collision insurance
- Comparing comprehensive and liability insurance
- Do you need comprehensive auto insurance?
What does comprehensive auto insurance cover?
Comprehensive auto insurance covers damage to or destruction of your vehicle by events other than a crash or collision. In the event of a peril covered by your comprehensive insurance policy, it will pay for repairs or replacements up to your policy dollar limit. These events include:
- Theft of your vehicle.
- Natural disasters such as earthquakes, hurricanes and tornadoes.
- Falling objects such as branches and ice.
- Windshield and window damage.
- Explosion, fire and smoke damage.
- Hail and snow.
- Damage caused by hitting an animal.
- Civil disturbance and vandalism.
These are the most common coverage points in comprehensive coverage policies offered by most auto insurance providers. In order to make sure you're getting the best comprehensive auto insurance you can, compare quotes from multiple providers.
What does comprehensive car insurance coverage exclude?
Common comprehensive insurance exclusions include:
- Any damage or destruction to your car due to collision.
- Any property theft within the car.
- Towing, roadside assistance or car rental.
- Lost wages or disability.
Fortunately, these exclusions are often covered by liability insurance or by collision coverage.
Comprehensive vs. collision insurance
Since comprehensive insurance and collision insurance are often found together under full coverage, which insurance covers what may get a bit muddy. The easiest way to explain the difference is to say that comprehensive coverage takes care of damages or loss to your car caused by events other than collision.
For example, if your car were damaged by vandalism, it would be covered by comprehensive insurance. If your car were damaged by hitting another car, it would be covered by collision insurance.
Comprehensive vs. liability insurance
A key difference between comprehensive and liability auto insurance is that liability insurance is mandated by law in most states. Comprehensive insurance isn't required by any state law. But if you're purchasing a car through a lender, they will probably require you to get comprehensive insurance as part of your lending agreement in order to protect their investment.
Comprehensive insurance and liability insurance also differ in regard to what is covered. Liability insurance covers medical bills, legal fees and property damage to others if you are responsible for a car accident.
Do I need comprehensive car insurance?
As mentioned earlier, the state you live in won't require you to buy comprehensive insurance, but your lender will usually ask for it if you're financing. If this isn't an issue, you have some factors to consider as to whether or not to buy it.
Age of your car
If you have an older car, it may not be worth your while to invest in comprehensive insurance. A comprehensive claim pays out at fair market value. This means that you will be reimbursed for your car after it's damaged or destroyed based on what it is currently worth, not what you paid for it out of the lot. When you consider that you'll have to pay your deductible before you get the remainder of your claim from your auto insurer, the return on investment may not be worth it.
Crime in your area
If you live in a high-crime area, comprehensive insurance may be a good idea. If your neighborhood has a high risk of theft or vandalism, these are already factors for higher insurance rates. You probably don't want to add to your financial problems by having to pay for a new car or repair damages out of pocket.
Do you live in an area prone to extreme winters or heavy winds? Both can cause ice or a heavy branch to fall on your car and cause a lot of damage. If bad weather is a mainstay in your area, comprehensive auto coverage can be a good protection investment.
Simply put, can you afford to buy a new car quickly if yours is totaled by a falling tree? If you rely on your car on a daily basis, this can put you in a bad position. According to our data, it costs just an additional $8.75 a month to add comprehensive coverage onto your basic auto insurance policy. Unless you have a strong bank account and don't mind using it to buy a new car, getting comprehensive auto insurance coverage is in your best interest.
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