Comprehensive insurance is a type of auto insurance that covers damages done to your vehicle from something other than a car accident. For example, if your car suffers storm damage, is hit by a deer, is vandalized, or if a tree falls on it, comprehensive insurance will help to cover the damages.
Comprehensive policies are optional in every state. If you’re financing a vehicle, your lender may require this type of insurance. Even if you’re not financing, these policies offer valuable protection that you might want to consider, especially if you live in an area where any of the above situations are likely to occur.
How Does Comprehensive Insurance Work?
Comprehensive insurance is considered an add-on, meaning it typically cannot be purchased as a stand-alone policy, but can be added to an existing policy. Because this policy covers damage not caused by an accident, you might hear it called “other than collision” coverage. You might also hear the term “full coverage,” but that refers to a package deal that includes comprehensive coverage plus collision coverage.
Comprehensive insurance typically has a limit on how much it will pay for damages. The limit is usually the value of the vehicle. If you’re driving an old car that is worth about $1,000 and you hit a deer and incur $2,500 worth of damage, your insurance company is going to cap the amount at the $1,000 value of the car. If you have a deductible of $500, then your insurance will only reimburse $500 of the repairs. In this situation, comprehensive insurance might not be the right coverage for you.
On the other hand, if you have a $50,000 vehicle and you hit a deer, incurring $20,000 in damages, you’ll pay your deductible and your comprehensive insurance will cover the rest of the expenses, making it a wise purchase.
Most comprehensive policies have a deductible, which means if there is a covered event, you’ll have to pay some money before your insurance policy kicks in. On the positive side, this means that if you want the coverage but are wary of the expense, having a higher deductible can lower your premium payments, making this insurance more affordable.
Benefits of Comprehensive Insurance
Comprehensive insurance can be valuable, especially if you feel your vehicle is at risk for certain events. For instance, if you live in a more rural area and your odds of hitting a deer are high, you’ll want comprehensive coverage. Likewise, if you live in a city and your apartment complex has no protected parking, you might stand a greater risk of theft or vandalism to your vehicle, making comprehensive insurance a good option.
The real benefit to adding comprehensive insurance to your policy is that it covers situations that aren’t covered by collision or liability insurance. Some events that comprehensive insurance may cover include:
- Damage from hitting an animal
- Natural disasters (tornadoes, earthquakes, floods, hurricanes, etc.)
- Riots and vandalism
- Vehicle theft or theft of parts of your vehicle
- Broken windshields
- Falling objects (hail, rocks, branches, trees, etc.)
Disadvantages of Comprehensive Insurance
The biggest disadvantage to adding comprehensive insurance to your policy is the additional expense it brings. However, because this insurance is optional in all states, you don’t need to purchase it if you don’t find it necessary.
For example, if you don’t use your vehicle often or if your vehicle isn’t high in value, then getting comprehensive insurance might be something to consider passing on. In these situations, there’s not much risk of a qualifying event happening to your vehicle, and even if it did, the value of your vehicle might be less than the cost to repair it.
When deciding if the expense of comprehensive insurance is worth it, remember that this insurance only covers damage to your vehicle due to specific instances. It does not help with collision expenses and it doesn’t cover stolen personal items inside the car.
Comprehensive vs. Collision Insurance
Collision and comprehensive insurance are often confused. Both types of insurance are optional in every state, so you don’t need to have them, but both offer benefits that may prove valuable to you.
Collision insurance is there for car accidents. Whether you’re in an accident with another car or several vehicles, are in a single-car rollover, or if you hit an object like a bollard in a parking lot, collision insurance is the type of policy that will help pay for repairs to your car. It also steps in if there are damages due to potholes.
Comprehensive insurance doesn’t cover any of the incidents that collision insurance does. Instead, comprehensive insurance is useful if your car has storm damage, is vandalized, hits a large animal, or is in a flood.
These two insurances work well together to protect your vehicle under a wide variety of different scenarios, but both are optional and add another expense to your insurance premium.
Who Should Consider Comprehensive Insurance?
Those who drive frequently, own a high-value vehicle, are about to purchase a vehicle, or live in an area with a high incident rate of vandalism would likely benefit from having comprehensive coverage. While comprehensive insurance isn’t required by any state, it will most likely be required by a lender if you’re financing your vehicle.
If you’re not financing, then it’s an optional policy, and you’ll want to weigh the cost of comprehensive insurance against the value of your vehicle and the odds of it incurring damage from a qualifying event.
The balance between cost and value is usually a top deciding factor. If you have a new luxury vehicle, a lot of money may be at risk on the road, and you’ll probably want comprehensive coverage. On the other hand, if your vehicle is low in value, you might be better off saving the money you’d pay on the premium and keeping that as your “just in case” fund.
The other deciding factor is probability. If you think you’re likely to have your car damaged by something other than another vehicle or driver, then you will want comprehensive insurance. If you doubt you’re at risk for any of those events, then skipping comprehensive insurance may not be a bad decision.