Comprehensive insurance is coverage that enables you to pay for replacing your vehicles or repair them if seized or damaged in an unpleasant occurrence, which must not be because of a collision.
Comprehensive, sometimes named “other than collision” coverage, typically covers fire, demolition, or falling objects (such as a tree or hail). If you are investing or leasing your car, your lender likely wants comprehensive coverage. If you possess your vehicle completely, it is an optional coverage insurance policy on your vehicle.
Comprehensive VS Collision Insurance
Comprehensive and collision auto insurance are usually discussed together, and they can be obtained separately or simultaneously. Liability insurance, comprehensive insurance, and collision insurance are the three parts of a vehicle insurance policy. State law needs drivers to hold liability insurance, but comprehensive and collision insurance are totally optional if someone possesses a vehicle outright.
If a person has funded the car, the auto loan company might need comprehensive insurance. Suppose the car owner has paid for the vehicle in full and cannot afford comprehensive insurance.
In that case, they own an older automobile that does not have much value, think they are at low risk of non-collision damage, or prefer to self-insure, the owner can choose not to purchase comprehensive insurance.
On the other side, even if someone holds an automobile free and fair, if they reside in rural areas where encounters with animals are expected, in a stormy area that frequently gets hail, or in a higher-crime place of town where break-ins and crime occur commonly, they might require to acquire comprehensive insurance.
Is comprehensive insurance full coverage?
Despite its name, comprehensive insurance individually does not completely cover every situation.
For example, accidents or injuries you cause to others are not incorporated; liability insurance needed in every state excluding New Hampshire includes those events. But comprehensive insurance is one of the various types of coverage that collectively are often regarded as “full coverage.” It also incorporates liability and collision insurance, covering your vehicle in a clash with anything except an animal.
What does Comprehensive insurance cover?
The word “comprehensive” can be misunderstood. Comprehensive, also perceived as “other than collision,” does cover various circumstances that collision seems not. Since comprehensive insurance specifications can vary, it is a great idea to carefully analyze your car insurance policy to learn exactly what is covered.
Comprehensive insurance usually covers your vehicle in these situations:
- Destruction
- Stolen
- Glass breakage
- Damage from flying weapons (defined as any flying or moved object, like an item falling off a vehicle) or falling objects (trees, rocks, etc.)
- Hitting an animal
- Fire
- Floodwaters
- Damage due to natural events or severe weather (e.g., hail, wind, tornado, or hurricane)
- Suppose your vehicle is destroyed due to one of these hazards. In that case, your comprehensive coverage funds for the repairs or total loss up to your car’s actual money value after paying your deductible.
Comprehensive coverage can be strangely confusing to drivers from other countries who are used to purchasing “comprehensive insurance” that covers liability and physical damages, also understood as “third-party coverage” abroad, all followed into one policy.
What does collision insurance cover?
You may have learned that carrying comprehensive and collision is “full coverage.” That can be misleading. Collision and comprehensive cover many circumstances, but they do not cover everything.
In these situations, Collision insurance covers your vehicle:
Your vehicle hits another vehicle.
Your vehicle is hit by another vehicle.
When you hit a stable object (e.g., tree, fence, house)
Accidental flipping, rolling or overturning of your vehicle.
Collision covers your car from collision damages, despite fault. To claim that, you will require to pay your deductible, and then your coverage will give the remaining price of repairs or for the total loss of your vehicle.
What does not cover in comprehensive and collision insurance?
Owning both comprehensive and collision insurance for your vehicle safe you against many circumstances, but not everything. It does not cover the following conditions:
- Wear and tear
- Mechanical failure (not related to an accident)
- Electrical failure
- Custom equipment that was not listed and particularly covered on the policy or custom-equipment support
- Additional destruction created by failing to take precautionary measures
- Deliberate actions
- Criminal activities (damages during your try to escape from police)
- Confiscation or damage of your vehicle by law enforcement
- And while not likely, coverage also eliminates damage occurring from these extreme scenarios:
- Nuclear exposure or explosion
- Bio-chemical attack
- War
Comprehensive coverage covers vehicle stolen, but not everything in it. Neither collision nor comprehensive coverage includes the following situations:
- Personal items damaged in or stolen out of your vehicle
- Damaged or stolen electronic equipment that was not initially placed in your vehicle (Various aftermarket electronics require an additional endorsement.)
Are comprehensive and collision coverage required to carry?
Comprehensive and collision are optional coverages, there is no state demands you to take either of them.
If you intent to finance or lease your car, the financial company will require you to carry comprehensive and collision until the vehicle is paid off. The car is the financial system’s asset. As the lender has the power to ask you to get this coverage, carry a deductible (usually only $500 or less is needed), and get any damage fixed.
Some car insurance agencies only give comprehensive if you also hold collision on your policy. It is uncommon to take just one or the other. But in some cases, such as collecting a vehicle and not driving it, it might make sense to have comprehensive only, not collision. You will require to check to know if individual coverages are possible with your insurance company. Comprehensive and collision are necessary if you need to register claims with your car insurance company for most kinds of destruction to your car, including its complete damage. There is no other kind of insurance that will cover your car in this way.
How are the limits of comprehensive coverage and collision coverage set?
Unsimilar to liability insurance, you do not pick a maximum limit for collision and comprehensive. Rather, the limit to the coverage is decided by the value of your car. The most of the time your collision or comprehensive coverage will payout is the actual cash value (ACV) of your car. The ACV is the favorable market price of your car the time before the accident happened.
In comparison insurance, with property destruction liability insurance, you prefer the highest limit, and if you harm someone else’s car, your insurance will pay up to your limit price. If the person’s repair expenses surpass your liability limit, you may be claimed and be taken responsible for giving the remaining charges.
The exemption to the ACV limit for comprehensive or collision coverage is if you have registered a classic or specialty car and pick an agreed-on value policy. This is what you require if you have spent much money repairing an older car, and book value does not match the car’s actual worth. With this particular type of coverage, you determine the vehicle’s value at the start of the policy.
What is a deductible?
A deductible is an amount you spend out of you pocket before your car insurance coverage works into impact to pay the remaining costs of renovations or real cash price for a totaled vehicle. Deductibles are per event, so every time you make a collision or comprehensive claim, you will owe a deductible.
Deductibles typically work from $250 to $1,000, although some insurers allow higher – up to $2,500. If your car is rented or financed, your agreement will normally ask your deductible to be set at a specific amount, typically $500 or lower.
Comprehensive Coverage Deductibles and Limits
When you buy comprehensive coverage, you will choose a set deductible, which is the money you pay out of your pocket toward a covered claim. Let’s suppose you choose a $500 deductible, and your car is damaged later by a hailstorm in a covered claim. If it requires $1,500 to fix your car, you will give your $500 deductible, and your insurance company would pay the other $1,000.
Comprehensive coverage has a limit, or the highest amount your policy will give toward a covered claim. The limit on comprehensive coverage is typically the real cash worth of your vehicle.
For example, if your car is seized, your insurance company would compensate you for your car’s depreciated worth, minus your deductible. Or you can say, if you needed to replace your seized vehicle with a newer make and model, you would possibly have to use some of your own cash to do so, besides, to use the compensation from your insurer. Keep in understanding that the comprehensive deductible and limit are different from your policy’s collision deductible and limit.
The cost of comprehensive coverage and collision coverage:
The value of car insurance coverage relies on many evaluation factors, from your gender, age, and driving experience to your place and credit number. Significant for collision coverage rates is the kind of car you drive and your driving experience.
Insurance companies have their own claims knowledge on your model car, and if the price of claims and repairs is higher, you may have to spend more for your coverage. If your vehicle has a high theft chance, your comprehensive rate will possibly be a bit higher.
Your driving experience also reveals what kind of risk you are to car insurance providers. If you are prone to the accident and have many past claims, require to spend more for your collision coverage.
Location is also a significant factor affecting cost. If you live in a stuffed, metropolitan area, you will spend more than someone in a rural area, just as someone in a region likely to face hail storms more frequently (and consequently hail claims) will spend more than someone who resides where weather claims are little. Standard costs for coverage differ by state, with the average being $596 per year for collision coverage and $192 for comprehensive coverage, according to a price review by Insurance.com. Depending on your vehicle’s value, this can be relatively inexpensive, acknowledging that if your car is totaled in an accident, you should take the actual cash value (ACV) for your vehicle, deduct your deductible. Your car’s ACV is the vehicle’s fair market value the time before the accident or damage happened.
The following chart shows the collision and comprehensive costs by state.
| STATE | Collision Average Premium (ANNUALLY) | Comprehensive Average Premium (ANNUALLY) |
| Alabama | $366.12 | $169.90 |
| Alaska | $370.63 | $140.50 |
| Arizona | $312.95 | $204.93 |
| Arkansas | $364.07 | $216.70 |
| California | $453.88 | $96.15 |
| Colorado | $326.39 | $228.32 |
| Connecticut | $398.50 | $133.91 |
| Delaware | $344.34 | $133.19 |
| District of Columbia | $497.81 | $224.28 |
| Florida | $343.41 | $137.88 |
| Georgia | $381.66 | $169.68 |
| Hawaii | $342.17 | $106.97 |
| Idaho | $246.22 | $130.86 |
| Illinois | $336.00 | $133.32 |
| Indiana | $277.65 | $130.71 |
| Iowa | $244.39 | $133.32 |
| Kansas | $280.48 | $267.10 |
| Kentucky | $300.45 | $157.38 |
| Louisiana | $468.87 | $231.76 |
| Maine | $286.22 | $108.54 |
| Maryland | $393.57 | $162.34 |
| Massachusetts | $427.17 | $145.10 |
| Michigan | $462.80 | $157.50 |
| Minnesota | $257.41 | $197.67 |
| Mississippi | $365.06 | $229.41 |
| Missouri | $305.96 | $204.08 |
| Montana | $278.31 | $267.84 |
| Nebraska | $263.68 | $253.30 |
| Nevada | $344.81 | $115.46 |
| New Hampshire | $319.72 | $115.63 |
| New Jersey | $403.19 | $129.12 |
| New Mexico | $304.46 | $197.95 |
| New York | $437.13 | $179.31 |
| North Carolina | $333.60 | $133.49 |
| North Dakota | $263.72 | $241.51 |
| Ohio | $297.50 | $128.46 |
| Oklahoma | $343.57 | $254.61 |
| Oregon | $265.06 | $101.80 |
| Pennsylvania | $363.42 | $162.59 |
| Rhode Island | $460.49 | $136.58 |
| South Carolina | $302.52 | $197.24 |
| South Dakota | $236.35 | $308.71 |
| Tennessee | $343.10 | $158.13 |
| Texas | $430.54 | $234.17 |
| Utah | $293.62 | $122.44 |
| Vermont | $324.51 | $142.83 |
| Virginia | $305.61 | $146.00 |
| Washington | $297.16 | $113.77 |
| West Virginia | $345.68 | $213.34 |
| Wisconsin | $243.52 | $148.83 |
| Wyoming | $290.18 | $291.22 |
Note: This information is taken from the National Association of Insurance Commissioners, 2020 Auto Insurance Database Report. And the data is accurate as of 2017.
How do I decide to make a claim against my policy?
You can only claim if the price of repairs is costlier than your deductible amount. Before the deductible value is given, you are liable for the expense of repairs to your vehicle.
If your claim cost is not much higher than your deductible amount, it may still be deserving to pay out of pocket and not a claim, which can influence your future rates.
For example, if your claim is $700 and your deductible is $500, it is suggested to look at your finances first to see if you can manage the whole $700 so that your rates are not impacted at your next renovation period make a claim. Remember, various claims can make your charges high or even let your insurer non-renew at the end of your policy because you are now considered too much of a risk.
Collision and comprehensive coverages observe the car, not the driver. If someone uses your car and has a mishap while driving, your car insurance policy will be applied to process the claims – which will possibly harm your future rates.
Making a comprehensive claim
Comprehensive claims are prepared for incidents that are almost always out of your power such as someone smashing into your car, hail destruction, or your vehicle hitting an animal. Because of this, comprehensive claims usually will not raise your rates unless state laws say differently. However, many claims of any sort can place you at risk for non-renewal or influence your rates ultimately, such as four comprehensive claims in three years.
A comprehensive claim is presented the same way as a claim for collision: call your insurance provider and describe your vehicle’s destruction and how it occurred. Your insurance company will make sure the situation is covered and lead you through the claims process, such as how to get evaluations for your damage and how and when your deductible will be expected.
Making a collision claim
Despite who is at mistake in a mishap, you can get a collision claim. Your deductible will be expected, and then the repairs or complete loss of your vehicle will be given, up to the car’s real cash worth.
If the other person is at the mistake, you have the option of putting the claim into the other person’s property damage liability coverage or your collision coverage. You may want to register a claim under your collision coverage rather than the at-fault party’s insurance if the other driver’s limits are less and may not reach your repairs or the complete loss of your vehicle.
Suppose your claim is made through your collision coverage, your car insurance company should pursue the other party or his insurance company for reimbursement. As part of the subrogation method, your insurer will generally try to recover your deductible cost for you.
If you are renting or financing a car, normally, you would have had to include the lender to your policy as an extra insured and loss recipient. That suggests your lender will be listed on your settlement check and would have to authorize it.
Some lienholders will endorse the check over and enable you to use the cash to make the repairs with that cash; others will keep the analysis until you confirm the repairs have been done and then sign the reimbursement check over to you.
Vehicle repairs
For either a comprehensive or collision claim, you usually can choose whatever repair store you like, unless you have accepted with your insurance company proposal to use a specific shop (generally for a decrease in your premium).
If your car is financed or rented, you will generally require a licensed mechanic to do the repairs. If you own your car completely, you may be capable of repairing the car yourself and keeping any extra claim money. However, suppose you cannot make proper repairs or prefer not to make the repairs and pocket the money. In that case, later claims could be rejected or paid at a lower amount because the initial damage was not fixed accurately.
If your vehicle is regarded as a total loss, you will be given actual cash value (ACV) for it. ACV is what your car was valued the moment before it was ruined. You may disagree with the value your car insurance company gives you for your calculated vehicle, which it defines using proprietary software, also pricing guides like the National Automobile Dealers Association guide book and Kelley Blue Book.
The best approach for you to discover your car’s ACV is by looking at the corresponding pricing guides and local sales of the corresponding year model and make as the car you wasted. If you find proof your vehicle is valued more than the price you are offered, show that evidence to your insurance company to arrange a higher settlement amount.
Your entire settlement amount should cover taxes and fees you spent at purchase since you will pay comparable prices for your replacement vehicle.
Ways to save on collision and comprehensive coverage:
Beyond picking a higher deductible, you can store on collision and comprehensive premiums by getting discounts. Always question your insurer if you are getting all the possible discounts that should refer to your circumstances.
- Discounts differ by the insurer and by state, but here is a list of standard discounts:
- Completing a driver training or accident prevention course
- Multi-car discount
- New car discount
- Alternative fuel or hybrid car
- Good student discount
- Student away
- Good driver
- Low mileage
- Pay-as-you-drive programs
- Car with specific characteristics may also be qualified for collision discounts
- Anti-lock brakes
- Traction control systems
- Electronic stability systems
- Daytime running lights
- Comprehensive discounts
- Good student
- Student away
- Good driver
- Anti-theft devices
- VIN etching on a vehicle
- Multiple vehicles on policy
- Alternative fuel or hybrid car
- Your insurance company does not mind if you owe more money to your lienholder than its ACV. If your car is valued less than the price you owe, you need to purchase gap insurance. Gap insurance funds the discrepancy between the ACV paid out by an insurance company for the complete loss of your car and the price you still owe the finance or leasing company.
Think before dropping optional coverage types
If you possess an older car, you might consider dropping collision and comprehensive insurance to protect your car insurance bill.
But think well. Dropping coverage could abandon you with an important coverage gap. For instance, if you bump a car into a fence, you will be stuck spending your car repair bills independently.
If you choose to drop coverage, you do not need to drop both. For instance, suppose you have a good driving history. In that case, it may be a more secure financial bet to drop collision insurance but keep comprehensive insurance, which funds for repairs for issues that do not include your own driving.
Think dropping comprehensive and collision if the following conditions happen
- When comprehensive and collision premiums touch 10 percent or higher of the potential payoff of these coverages. The possible payoff is your vehicle’s real cash worth minus your deductible. For instance, if your car is valued at $3,000 and your deductible is $500, your possible payoff is $2,500. If your yearly comprehensive and collision premiums exceed $250, it is the moment to drop them.
- If your annual comprehensive and collision premiums and deductible sum up to more than the cash value of your car.
- At the point where you would not pay to repair your car if it had mechanical concerns. Instead of paying for comprehensive and collision, utilize the cash to help increase your savings for the more latest car.
Need of comprehensive insurance and collision insurance for a rental car
Typically, the coverages you have upon your car insurance policy, such as liability and comprehensive and collision, continue to a rental car that you have for the hobby, not for the business. There are some costs, such as a loss-of-use cost, that may or may not be included. A loss-of-use price is a fee the rental company will credit you for being incapable of renting out the car when it’s a repair period.
Before leasing a car, reach your insurer and review if your policy operates on a rental car and know the limitations. Remember, if you claim a rental vehicle, it is still a claim on your insurance that can influence your future rates.
Some examples of comprehensive and collision accidents and claims
- You rear-end another vehicle. You and the other driver are both shifted to the hospital for the treatment of minor injuries. Your car is financed.
If you are considered to blame for the accident, your property damage liability funds for the costs to the other driver’s car. In contrast, your physical injury liability coverage is liable for his or her injuries, up to your limits for both. For your vehicle, collision coverage would include your damages, deduct your deductible. Your finance company will mandate that you receive the car repaired.
For your injuries to be treated by car insurance, you’d require personal injury protection (PIP) or medical payments (MedPay).
- A co-worker’s car door smashes your leased car in the parking lot and gives a dent and marks.
Your co-worker’s property damage liability coverage should include this incident. No deductible is expected because you are claiming the policy of someone else. If your co-worker had no insurance, then you could make an accident claim, but your deductible would be expected. If the damage were minor and under your deductible value, you would have to adjust it with your co-worker to make him or her pay for repair costs personally.
- Your newly licensed teen misses a corner and pushes your financed car into a fire hydrant. This is a collision claim for the destruction of your vehicle and a liability claim for the value of fire hydrant replacements and water loss, which can be costly.
Why buy comprehensive coverage
If you are confused whether you should purchase comprehensive coverage, here are a few points to consider:
Your car’s lender may require comprehensive coverage.
If you are renting or financing your car, your lender may ask you to have collision and comprehensive coverage until the car is paid off.
Condition of your car, and what is it worth?
If you have paid off your vehicle, comprehensive coverage is optional. It may be an excellent idea to find out the Kelley Blue Book value of your car. Would you be able to spend that price on repairing or replacing your car if it were seized or damaged in an accident? If you cannot manage to spend much out of pocket, purchasing optional coverages, like comprehensive coverage and collision coverage, maybe a clever choice.
How much are the yearly premiums for comprehensive and collision coverage?
The Insurance Information Institute recommends that you take the price you’d spend in a year for comprehensive and collision coverage and multiplied it by ten. Is your car value less than that number? Then comprehensive and collision coverage may not work as a cost-effective alternative for you.
Final words
Cannot manage to pay for car damages from your pocket, then having your comprehensive coverage and collision coverage might be a smart decision. It is also essential to evaluate your driving practices and risk factor. Do you think yourself a safe driver? What is the risk of you getting in an accident where you reside? These are things you should consider before making a decision.
It’s up to you to get comprehensive and collision insurance, but if you don’t have enough savings to pay for a potential accident, it’s definitely a good thing to have. That’s the reason you would have insurance; it’s to protect you from that risk.
