HomeBlogWhat Is Comprehensive Insurance (Explained: All You Need To Know)

What Is Comprehensive Insurance (Explained: All You Need To Know)

Looking for What Is Comprehensive Insurance?

What does it cover?

What’s the difference with collision coverage?

Keep reading as I have gathered exactly the information that you need!

Let me explain to you what comprehensive insurance means and why it’s important!

Are you ready?

Let’s get started!

What Is Comprehensive Insurance 

Comprehensive insurance is a type of coverage to an existing insurance policy that covers your car or vehicle involved in an accident that was not caused by a collision.

In other words, if your car was stolen, vandalized, damaged by natural events like hail, or animals, then your comprehensive insurance will cover you for your damages.

Although most use the term “comprehensive insurance”, it should be referred to as “comprehensive coverage” as it’s a type of coverage on an existing policy.

For comprehensive insurance to apply, the damage should not be caused by a collision.

For instance, if you hit another car, a tree, or a signpost, that’s considered a collision.

On the other hand, if your car is damaged further to acts of vandalism or hail, then your comprehensive coverage will apply as you did not suffer damages to your car due to a collision.

Typically, you will need to take comprehensive coverage as additional coverage to your standard car insurance.

What Comprehensive Insurance Covers

In general, comprehensive insurance covers your vehicle for damages in situations where the damage did not occur due to a “collision”.

Here are some common scenarios where comprehensive insurance covers the damages on your car:

  • Your car was stolen
  • Your car glass was broken
  • Your car is damaged by fire
  • Your car is damaged by flood
  • Your car is damaged by hail
  • Your car was hit by an animal 
  • Falling objects 
  • Natural disasters 
  • Civil unrest like riots 
  • Windshield damage 

What Comprehensive Insurance Does Not Cover

If your car was damaged due to a collision, your comprehensive car insurance will not cover your losses.

Here are a few examples of losses or damages that your comprehensive insurance will not cover:

  • Your car hits another car
  • Your car hits an object like a tree 
  • Damage to another person’s vehicle 
  • Your medical expenses 
  • Your passenger’s medical expenses 
  • The normal wear and tear on your car 
  • Your car belts and hoses
  • Your tires 
  • Your brakes 

What Is Comprehensive Insurance Deductibles 

A comprehensive deductible is an amount specified in your insurance policy that you are required to pay to get the insurance company to pay for your damages.

Depending on the nature of your insurance and the amount of deductibles you are required to pay, your insurance premiums can go up or down.

The more you pay in deductibles, the more you are taking a financial risk, and your premiums can slightly go down.

On the other hand, the lower your deductibles, the less risk you are taking, the higher your insurance premiums.

For example, imagine that your car was stolen at the supermarket.

Your policy requires that you pay $500 in deductible to get the insurance company to cover you for your stolen vehicle.

You pay $500 and then the insurance company will pay you the coverage you have under your policy.

What Is Comprehensive Insurance Vs Collision

What is the difference between comprehensive insurance vs collision insurance?

The main difference between comprehensive insurance and a collision insurance is the type of incident that results in the loss or damage to your car.

If your car was damaged for reasons “other than a collision”, then your comprehensive insurance will apply.

For example, if your car is damaged because it got hit by an animal, due to theft, or due to a hailstorm, then you can expect your comprehensive coverage to pay for your damages.

Your collision insurance will apply when the damage to your car resulted specifically from a collision.

For example, if you were driving and hit a tree, another vehicle, or an object on the road, that will be considered a collision.

Single car loss with damages to the vehicle such as swerving and hitting a tree is considered a collision.

Aside from that main difference, both the comprehensive insurance and collision will get triggered when you file a claim and pay the deductibles.

Frequently Asked Questions

Let’s look at frequently asked questions related to what is comprehensive insurance.

What Is A Comprehensive Coverage Limit

Comprehensive insurance policies have a limit beyond which your insurance company will not pay for your damages.

Your coverage limit is essentially the maximum amount of money that your insurance provider will pay to cover you for a covered claim.

In general, the insurance company is required to pay the actual cash value of your vehicle when you trigger your comprehensive policy.

The actual cash value represents how much your car was worth in the market at the moment it was damaged or stolen.

In other words, your car’s depreciated value or market value.

What Is Comprehensive Deductible

A comprehensive deductible is an amount of money that you are required to pay under your comprehensive insurance policy to get your insurance provider to pay you for your damages.

For example, imagine that you suffer $5,000 in damages due to a hailstorm and you have a $1,000 deductible under your policy.

For your insurance company to pay you $5,000 for your damages, you first need to pay $1,000 out of your own pocket.

The net compensation you get is essentially what your insurance company pays out less your deductibles.

How To Choose Comprehensive Coverage Deductibles

When choosing comprehensive coverage, you’ll need to decide how much you will want to pay in deductibles should there be a covered claim.

Insurance companies allow you to choose different amounts that can range from zero all the way to thousands of dollars depending on the nature of the policy and coverage.

For auto comprehensive coverage, you may typically see deductibles ranging between $250 to $1,500.

The higher your deductibles, the lower your insurance premiums can be (and vice versa).

So be sure to select a deductible that makes sense to you and that you can afford if something were to happen to your car.

What Is The Difference Between Comprehensive And Collision Coverage

In a nutshell, comprehensive insurance helps you pay for your car repair and damages if you suffered damages as a result of an event other than a collision, such as theft, vandalism, falling objects, animals hitting your car etc.

Collision insurance helps pay for your car repairs and damages resulting from a collision with another vehicle, object, rollovers, or any other type of accident where the driver collides with another.

What Is The Difference Between Comprehensive And Full Coverage

The term “full coverage” is a relatively ambiguous term that is used quite often by many.

When someone uses the term full coverage, they are generally referring to both comprehensive coverage, collision coverage, along with any other coverages on a policy.

It’s like saying that you have a “full” package.

Comprehensive insurance coverage is additional coverage that can be taken on an existing policy to cover non-collision-related damages to your automobile or vehicle.

Why Buy Comprehensive Insurance

There are different reasons why a person may want to purchase comprehensive insurance.

The most common reason is that individuals financing a car or leasing a car will be required by their lenders to get comprehensive coverage in addition to their standard collision coverage.

If you are the owner of your car or you paid off your car loan, you will not have an obligation to get comprehensive coverage but it may be good for those who may not be able to afford an important car repair or replacement should it be damaged or stolen.

Finally, some may take comprehensive insurance coverages if they drive an expensive car where any type of repair can be quite expensive. 

The overall financial cost of paying for the premium versus having to pay for an important repair may make a comprehensive policy worth it for some.

When Can You Add Comprehensive Coverage To Your Policy

In most cases, you can add comprehensive coverage to your existing car insurance policy at any time.

If you have auto insurance, motorcycle insurance, RV insurance, boat insurance, or insurance for any other type of vehicle, you may be able to add the additional comprehensive coverage.

Do You Need Comprehensive Coverage

In most cases, the law does not require you to have comprehensive insurance coverage.

However, you may be required to get comprehensive coverage if you are not the owner of your car.

For example, if you are leasing a new vehicle or financing the purchase of your car, your lender may impose the condition that you get comprehensive coverage before giving you the loan or the lease.

If you are not required by law or by a lender to get comprehensive insurance, you may want to consider it if you have an expensive car and where repairs can be expensive.

How Much Does Comprehensive Car Insurance Cost

According to the National Association of Insurance Commissioners (NAIC), the average comprehensive insurance premium cost $159.72 in the United States in the year 2017.

Although this is the national average, the premiums can vary on a state-per-state basis and for factors that relate to you.

For example, South Dakota appears to be the most expensive state with premiums of $308.71 per year whereas California is the least expensive at $96.15.

In addition to where you live, other factors that relate to you can influence your premiums such as your age, your driving record, your vehicle make and model, how much deductibles you choose, your coverage limit and so on.

The best thing you can do is to speak with an insurance broker or agent to help you or shop around by getting quotes from different insurance providers.

What Is Comprehensive Coverage Takeaways 

So there you have it folks!

What is comprehensive auto insurance in simple terms?

What does it cover?

How is it different than collision insurance?

Comprehensive insurance is a type of insurance coverage that helps protect you if you suffer a financial loss for reasons other than a collision with another vehicle or object.

In the insurance jargon, comprehensive insurance is sometimes called “other than collision insurance”.

Typically, your comprehensive insurance covers things like damage from fire, theft, vandalism, falling objects, or other similar events.

If you are the owner of your vehicle, you can take comprehensive coverage as additional coverage.

However, if you are financing your car or leasing, your lender will most likely require that you get comprehensive coverage.

Getting comprehensive coverage can be beneficial to those who may not be able to afford the high price of a car repair or to replace their car following a theft.

Your standard car insurance will generally provide you coverage for collisions (car accidents with other vehicles or single-vehicle accidents such as hitting a fence or a tree).

If you want to augment that coverage to cover you for damages related to events out of your control and not related to a collision, you should consider getting comprehensive coverage.

I hope I was able to provide you with a simple explanation of what is comprehensive auto coverage, what it covers, what it does not, what is comprehensive and collision insurance, and how it works.

Good luck!

Let’s look at a summary of our findings.

What Is Comprehensive Insurance Summary

  • Comprehensive insurance is a type of insurance policy that protects you against damages to your car or vehicle for non-collision events that were outside of your control
  • Typical examples of events outside of your control are damages from fire, theft, vandalism, falling objective, due to weather conditions, caused by animals etc
  • Comprehensive coverage is a type of coverage on an existing policy and not a specific type of insurance 
  • The main difference between comprehensive and collision auto insurance is that the first covers you for events that are non-collision-based and out of your control (like theft) whereas the other covers you for your car accidents when you hit someone or something else 
Actual cash value 
Actual total loss 
Best car insurance companies
Best car insurance policy 
Best car insurance quote
Business automobile policy 
Does car insurance cover theft 
How to buy a car insurance 
Liability car insurance 
What does a car insurance cover 
What is a full coverage
What is auto liability insurance
What is collision insurance
What is physical damage insurance 
What is property damage liability insurance
Author
Act of God
Accelerated benefits
Against all risks 
Best property insurance 
Covered claim 
Group term life insurance
Guaranteed insurability 
How to get affordable health insurance
Incidents of ownership 
Insurance deductibles 
Insurance endorsements 
Insurance floaters 
Insurance riders
Legal fees 
Named peril policy 
Nonforfeiture clause 
Twisting insurance 
What does liquidity refer to in insurance
What is an insurance guarantor
What is gap insurance
What is life insurance
What is term life insurance 
What is whole life insurance
Author

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Editor's Picks