Comprehensive Coverage: What It Is & Why You Need It
A standard auto insurance policy will have two primary components: liability coverage and property damage coverage. Liability comes into play when you injure someone or damage another’s property with your vehicle. On the other hand, property damage coverage pays for losses to your own vehicle. The property damage portion of car insurance policies also has two parts: comprehensive coverage and collision coverage. Whereas collision covers any losses to your vehicle resulting from a collision with another vehicle or object, comprehensive coverage pays for losses unrelated to collisions. For full car insurance protection, comprehensive coverage is essential, and we’ll explain why in what follows.
What It Covers
Comprehensive basically picks up where collision leaves off. When your car sustains damage that did not result from another car or object, the comprehensive portion of your policy will pay for the damages. Without comprehensive coverage, you would have to pay out of pocket for any losses to your vehicle not related to a collision. Here are the perils typically covered by comprehensive car insurance:
- Theft
- Fire
- Vandalism
- Broken windshield or window
- Animal damage
- Falling objects
- Storms (hail, wind, etc.)
- Water damage
The Costs
Adding comprehensive coverage to your auto insurance policy will raise your premiums, but the additional cost is usually very reasonable. Like with collision coverage, if you drive a very expensive car or a vehicle that is costly to repair, you will pay higher premiums for comprehensive coverage. Comprehensive is also similar to collision in that deductibles apply. If you make a claim against your comprehensive coverage, your benefit will be reduced by the amount of your deductible. For example, if you have a $4,000 loss and a $500 deductible, you will receive a settlement of $3,500. Comprehensive and collision coverage deductibles are set separately, so you can choose a deductible that is higher, lower, or similar to your collision deductible. Learn what happens to your car insurance after a DUI, and if it can affect your comprehensive coverage.
Who Needs Comprehensive
If you have a car that has a decent cash value, you need comprehensive coverage. The benefits for comprehensive claims are determined by the actual cash value of the vehicle. For example, if your car were stolen, your insurer would calculate its actual cash value (its original value less depreciation) to determine your settlement. As long as your vehicle has some cash value, comprehensive coverage is well-worth the extra premiums. For drivers with new or expensive vehicles, comprehensive coverage is especially important.When to Forgo Comprehensive
Of course, there are some circumstances in which comprehensive coverage is unnecessary. For vehicles with little or no cash value, comprehensive car insurance coverage could end up costing more than it’s worth. For instance, if your vehicle has an actual cash value of $1,000, carrying comprehensive coverage would probably not make much sense. Assuming a $500 deductible, if you make a claim on your comprehensive coverage, you would only receive a benefit of $500. The premiums you paid for the coverage over the course of the year would probably exceed that benefit. If you have a vehicle with minimal cash value, your best bet is to drop collision and comprehensive coverage and save the money you would’ve spent on the extra premiums. This way, if your vehicle is damaged, you can afford to repair or replace it out of pocket.