What Is Comprehensive Coverage?
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Comprehensive coverage can help you cover the costs of damages to your vehicle that aren’t caused by a collision. If you just wanted to be protected from collisions, you would get collision insurance. For everything else, you should consider comprehensive insurance.
What Does Comprehensive Coverage Cover?
- Natural disasters (hailstorms, tornadoes, mudslides, etc.)
- Civil disturbances (protests, riots, flash mobs, etc.)
- Falling objects (trees, rocks, structures, debris, etc.)
- Fire damage
- Hitting or being hit by an animal (deer, bear, etc.)
- Vandalism (graffiti, break-in, joy ride, damage, etc.)
If you own or lease your vehicle, your bank may force you to get comprehensive coverage.
What Doesn’t Comprehensive Coverage Cover?
- Damage to your car from an accident or collision
- Medical expenses or lost wages for you or your passengers after a collision
- Damage to another person’s car that you cause
- Towing and labor (sometimes called roadside assistance)
- Medical expenses or lost income for someone else after an accident
- Rental reimbursement
- Collision or rollovers
Comprehensive does not exactly mean “all-encompassing”. You should check with a car insurance agent to discover exactly what is covered. The aforementioned information should be sufficient for a broad overview. However, every provider and policy is different. Double-check it all with your insurance agent before you make any decision.
What Should Your Comprehensive Deductible Be?
When picking a comprehensive deductible, or if you want to buy Comprehensive Coverage, it’s crucial you think about how old your car is and how much fixing it might cost you.
A comprehensive deductible is the amount of money you would be all right paying out of pocket if you ever experienced this kind of loss. So, if your car was stolen and you had a deductible of $500, you would pay $500 of your own money and your car insurance provider would pay the rest.
How much you pay each month for comprehensive coverage is determined in a different way than for personal injury liability and property damage. With that type of coverage, the amount of protection you get dictates what you pay. With comprehensive coverage, though, the cost varies based on the deductible you choose. The higher the deductible, the less you’ll shell out each month for a premium – but the more you’ll spend of your own money if you file a claim.
But no matter what your deductible, the amount of comprehensive coverage provided depends on one big factor: the actual cash value (ACV) of your vehicle.
How do you calculate the actual cash value? Actual cash value is equal to what you paid for your car minus depreciation and your deductible. So, what will comprehensive coverage pay for? It will pay an amount up to the cash value of your car to either repair or replace it. If the cost repairing your car is more than the actual cash value of your vehicle, your auto insurance company will declare it a total loss and pay the sum of the actual cash value to ensure you can replace it – unless you want to retain salvage (keep the wrecked car). In that case, the salvage value will also be taken out of your payout.
The deductible amount usually ranges from $250 to $1,000. Increasing your deductible can reduce your monthly premium.
Ultimately, the biggest factor in determining whether you should get comprehensive coverage is your car’s value. If a covered car is damaged, the most that this coverage will shell out is the car’s cash value at the time it was damaged, minus the deductible amount. For a car that’s hardly worth anything – perhaps because it’s super old or a junk heap – the payout may be equal to or less than the price of the insurance.
The Legal Overview
There isn’t a single state that requires comprehensive coverage, but for people who finance or lease their car, their lender or lessee will probably require it. Lenders and lessees are the true owners of the vehicle, so they’ll want to make sure they’re protected in the event of a problem. For the same reasons, you’ll rarely be able to purchase comprehensive coverage without also buying bodily injury and collision coverage.
Who Needs Comprehensive Coverage?
Almost all drivers are at risk for the above, so the short answer to the question is, “Everybody.” Now, deer collisions may be a little rarer, but the rest of the stuff on the list can happen to almost anyone.
If you live in a high-crime area with a serious threat of auto theft and vandalism, you’ll probably have some peace of mind with comprehensive coverage. There were nearly three-quarters of a million cases of car theft last year.
And, if you live in an area with terrible weather – like Dallas, Texas – then you really do need comprehensive coverage. Hail damage can be very costly. A tornado can destroy your car. Floods and fires can also wreak havoc. If you live in an area where natural disasters are an issue, you should strongly consider this type of coverage.
If you’ve decided that comprehensive coverage is the right option for your car insurance policy, get in touch with your insurance agent today. He or she will be able to point you in the right direction.