Comprehensive Auto Insurance: A Quick Guide to the Terms
In the event that your car is damaged in an accident that was not caused by you driving or even on the road, comprehensive auto insurance, also known as “other than collision” coverage, will pay for repairs. Animals, falling objects, fire, vandalism, and extreme weather are just a few examples. In the event that your car is stolen, comprehensive insurance will cover the cost of a new vehicle.
Some other terms for comprehensive coverage include:
- Supplemental Insurance Not Associated With Collision Repair
- There was a fire and a burglary
- What Is Included in Full Coverage Insurance?
- A collision with another vehicle or an object like a fence or telephone pole is not covered by comprehensive car insurance. Despite the fact that “other than collision” damages may appear to be covered by comprehensive coverage, there are limits to this type of coverage.
1. There are only a few kinds of dangers listed here:
Contact with animals, such as a collision with a deer
Windshields or windows that are chipped, cracked, or broken
Extreme weather events such as tremors, flash floods, hail, and hurricane-force winds
Smoke, flames, and explosions
Falling debris, such as a tree limb.
Theft or damage to your vehicle as a result of an automobile break-in, such as if eggs or keys are found in your vehicle
2. Each insurance company has a different policy. Rental car reimbursement and towing are two examples of optional benefits that some insurance providers may include as part of their comprehensive coverage. If you don’t purchase the additional options, others may not cover these costs.
3. Compensatory policies might pay for the repair of broken windows or windshields as well. You’ll have to pay a deductible before your insurance company will cover the cost of glass repairs. In contrast, some insurers offer “full glass coverage,” while others offer full glass coverage with no deductibles from their policies.
What Is Excluded From Full Coverage Insurance?
Collision damage is not covered by comprehensive insurance. A collision with another vehicle or an object such as a fence, building, or utility pole is the same. It is necessary to have collision insurance in order to protect yourself from these kinds of losses. Pothole damage, as well as normal wear-and-tear on belts, brakes, hose, tires and windshield wiper blades, is not covered by comprehensive coverage.
Personal items that are stolen from your vehicle are not usually covered by comprehensive car insurance. Other types of insurance, on the other hand, might. Theft clauses may be included in your homeowners or renters insurance policy, so be sure to check.
Getting a Full Coverage Car Insurance Policy
After a particularly blustery night, you awaken to find a large dent in the roof of your car caused by a tree branch that fell on top of it. This type of damage is covered by your comprehensive insurance, so you can submit a claim and wait for your payout. Factors such as these will have an impact on the process and your payout.
A deductible is required for comprehensive car insurance. It is possible to save money on your insurance premiums by selecting a high-deductible policy. However, filing a claim will result in a smaller payout. If your deductible is $1,000 and the storm damages your car by $1,500, you’ll be on the hook for $1,000 in repairs and your insurance company will only cover $500.
Choosing a separate comprehensive deductible from your collision coverage is common. For example, you could have a $500 comprehensive deductible and a $2,000 collision deductible.
There are many deductible options to choose from, depending on your financial situation. If you can afford to pay for minor repairs, such as replacing a chipped windshield, then a $1,000 or higher comprehensive deductible might be a good idea. However, if your car is stolen, the insurance payout may not be enough to buy a new one. Each and every claim you file is subject to your deductible, so choose wisely.
Amount Paid Out in Cash
Insurance that covers the full replacement cost of your car if it is stolen or completely destroyed by a covered peril like a flood is commonly known as “comprehensive.” It’s important to note that this is not the price you paid for the vehicle. At the time of the event, you can use actual cash value to get a more accurate estimate of the car’s current market value or how much someone might be willing to pay for it.
Depreciation is applied to a vehicle’s value based on factors such as the vehicle’s age, make and model, and mileage.
4 In the first five years of ownership, the average car depreciates by 49.1 percent, but these rates can vary widely. Jeep Wranglers will depreciate by about 32.8 percent in the first five years, while Lincoln MKZs will depreciate by 67.1 percent..
If your car is stolen or totaled, the amount of money you’ll get back depends on both the actual cash value and the deductible on your insurance policy. Suppose your 2018 Chevrolet Malibu is stolen and you have a $500 deductible. Your maximum payout would be $9,822 in this scenario. For example, if your deductible is $1,000, the most you can get is $9,322 in benefits.
Underinsured Motorist (UM) Insurance
If you’ve just financed or leased a car, you might want to consider gap insurance because of how quickly and steeply they depreciate in the first five years. It’s a requirement for many car dealers and lenders. A total loss or theft of your financed vehicle in the first two years will likely not be enough to cover the remaining balance of your auto loan.
The insurance will cover the difference if you purchase gap protection. A Toyota Highlander 4WD, for example, costs $34,412. You can expect to get about $32,086 if it’s stolen in the first year. There is a $2,326 fine if you do not have gap insurance on your vehicle. But if you don’t, the insurance will step in and fill the void.
If you have a gap in your coverage:
A vehicle can be financed for five or more years.
Take out a car loan.
Don’t contribute more than 20% of the purchase price.
Cars that depreciate quickly should be purchased.
Roll over the equity in your previous car into a new loan for a new vehicle.
5. There are consumer advocates who warn that gap insurance may be overpriced in comparison to the risk it covers. Before purchasing any additional insurance, make sure you’ve done your homework and compared your options.
6. Is Comprehensive Coverage Expensive or Cheap?
Most drivers can save money by opting for comprehensive coverage. Premiums rise by an average of $134 a year, depending on the car and the driver. 2 With no insurance, even a windshield replacement can cost you several hundred bucks, and cracked windshields are common. It could save you hundreds or thousands of dollars in some repair costs if you add comprehensive to your policy.
Is Comprehensive Insurance Necessary for Me?
Compensatory auto insurance is not required by state law.
7. For leased and financed vehicles, however, most leasing companies and lenders require you to purchase the insurance. It is entirely up to you to decide whether or not to refinance after you have made your final car payment. It’s up to you to decide based on your own circumstances. It’s still a good idea if you can afford full coverage.
If your car is stolen or totaled due to a covered peril, consider whether or not you can afford to buy a new one. For those who can’t afford a new car or even a down payment, comprehensive coverage is a good option. Think about the role your car plays in your life right now. Is it your primary mode of transportation? If you misplaced your vehicle, how much would it cost to arrange alternate transportation? Personal preferences, as you can see, play a large role in your decision-making process.
One Approach to Helping You Make a Decision
First, determine the market value of your automobile before shopping around for comprehensive coverage. You can get an idea of what your car is worth by using consumer-friendly websites like Kelley Blue Book. If your car is worth more than $2,000, comprehensive insurance may be a good investment. However, if its value falls below $1,000, you may not require it, especially if you take into account the cost you would have to pay to meet the deductible anyhow.
Collision vs. Comprehensive: Which is better?
Many motorists are perplexed when they discover that their vehicle is covered by multiple types of insurance. In terms of collision and comprehensive coverage, it’s important to remember that they don’t overlap. In the event of a collision with another vehicle or object, your collision insurance will cover the cost of repairing or replacing your vehicle. Losses not caused by a collision are covered by comprehensive coverage.