Owning an automobile comes with a lot of perks and responsibilities, and one of those responsibilities is maintaining auto insurance coverage. Auto insurance can help protect the driver from potentially significant debt in the event of a crash or an accident.
Remember, though, there are different types of auto insurance. For example, having liability insurance is a typical requirement for operating a vehicle in most states. Liability insurance helps cover financial liabilities of third parties incurred because of the driver’s fault. If a vehicle is being financed or leased, a lender may also require a driver to maintain collision coverage. Collision insurance helps pay for repairs or replacement of the vehicle if the vehicle is damaged in an accident with another object. Another type of auto insurance coverage to consider is comprehensive coverage.
What Is Comprehensive Coverage?
Comprehensive insurance coverage is purchased to cover damages to a vehicle due to events entirely outside of the driver’s control. These events are often referred to as “acts of God or nature” where the driver and their vehicle are acted upon. While comprehensive coverage isn’t always required, it can make a big difference in protecting your investment in your vehicle and can offer a peace of mind about the many unpredictable circumstances you may find yourself in. If you’re considering purchasing comprehensive coverage, here are some of the most important aspects to consider.
What Does Comprehensive Insurance Typically Cover?
Comprehensive coverage can help the insured pay for damages to their vehicle that are not caused by a vehicle collision. This includes damages caused by:
- Vandalism
- Civil disturbance
- Explosions
- Fire
- Theft
- Windshield damage
- Falling trees/limbs
- Falling objects
- Animal-related accidents
- Rocks
- Objects falling off of/kicked up by cars
- Storms
- Wind
- Floods
- Hail
- Earthquakes
- Lightning
Collision vs. Comprehensive Insurance Coverage
It can be easy to confuse comprehensive and collision insurance coverages and sometimes difficult to understand which scenarios fall under what coverage. Let’s get into more detail.
Collision Insurance Coverage
When a vehicle is damaged in a crash or an accident, collision insurance may cover those damages, depending on the situation. It typically covers damage to a vehicle caused by colliding with another vehicle or object such as a tree or another obstacle.
Collision insurance will typically pay for the costs to repair or replace the vehicle regardless of the party at fault, but the circumstances do matter. You will typically have coverage under collision insurance when:
- a crash with another driver is caused by the insured policyholder;
- a collision occurs with an object (like a fence, mailbox, post, etc.);
- your vehicle rolls over; or
- another driver is at fault, and they don’t have any or enough insurance to cover damage costs.
However, collision insurance is not going to cover damage to another person’s vehicle, damage to your vehicle that isn’t due to driving (such as hail or theft), or any costs or expenses you incur for medical bills.
Comprehensive Insurance Coverage
Like collision insurance, comprehensive insurance covers damages to your vehicle (and no one else’s). Unlike collision insurance, comprehensive insurance does typically cover damages resulting from non-collision accidents. Comprehensive coverage does not typically include:
- Damage to your vehicle from a collision
- Damage to another person’s vehicle
- Any medical expenses incurred due to an accident or event
The most important thing to remember is that, generally, the actions and activity of the driver determine whether collision or comprehensive insurance covers the damages to the vehicle. If the driver is in control and causes some sort of accident, collision insurance may cover the damages to the vehicle. If an event occurs outside of the driver’s control (whether they are driving or not), the damage is typically covered by comprehensive coverage.
For example, if a vehicle sustains damage due to a hailstorm, the damage would be covered under comprehensive insurance since no one can control the weather. However, if the driver swerves to avoid an icy spot on the road caused by the hail and hits a fence as a result, the damage to the vehicle from hitting the fence would likely be covered by collision insurance.
Is Comprehensive Coverage Required?
Comprehensive auto insurance coverage is not required by law, but that doesn’t mean it’s always optional for every driver. For example, if you obtained a loan to purchase your vehicle or are leasing a vehicle, most lenders will require you to obtain comprehensive coverage. It’s expensive to repair or replace a vehicle, and the newer the model, the pricier those expenses are, too. To protect their investment, lenders will typically require drivers to have comprehensive coverage in addition to other auto insurance coverages.
Why Purchase Comprehensive Coverage?
How do you know if you really need comprehensive auto insurance? If your car is leased or financed, you will likely need to obtain comprehensive insurance. When considering this kind of coverage, it’s important to look at the cost and benefit ratio. Comprehensive coverage is usually worth the price tag if your vehicle has a high value or if you can’t afford potentially costly repairs.
Also, consider the deductible amount under your policy. A deductible is the amount of money the insured pays out of pocket towards a covered claim. If the cost of repairs doesn’t exceed the insured’s deductible, the insured will end up paying for the repairs fully out of pocket. For costly repairs, though, comprehensive coverage can make all the difference.
Let’s say someone with comprehensive insurance just put down quite a lot of money on a brand-new car, and a deer hits it. If the repair will cost about $1,000 and the insured has a deductible of $500, then both the insured and their insurance company will pay $500 each. If the damage is more substantial and the repair costs closer to $2,000, insurance company will pay most of the cost to repair the vehicle ($1,500).
The other caveat to comprehensive coverage is the limit on the value of the vehicle. If, say, someone’s vehicle is stolen, their comprehensive coverage will help pay to replace the vehicle, but likely not at the price the insured bought the vehicle for. The insurance company will reimburse the insured for the vehicle’s current and actual cash value. The depreciated value of their vehicle (and the deductible amount) will be subtracted from the original value of their vehicle.
Consider how old your vehicle is and what it’s worth before buying comprehensive coverage, as well as the annual premiums for this additional coverage. Talk to an insurance specialist to determine if comprehensive coverage is right for you.
Find the Right Policy with Acrisure
Driving without auto insurance can really hurt your bank account in those worst-case scenarios.
While comprehensive insurance may or may not be required depending on your situation, it may be worth considering. It can be especially frustrating when you hit an unlucky streak, and your vehicle sustains a damage that could not have been prevented. Insurance, in general, is designed to help safeguard your assets during unpredictable circumstances. Comprehensive coverage can be a good way to help prepare for the unexpected.
If you’re interested in comprehensive coverage or are still unsure if you need it, you can contact us to learn more about your options. We’ll walk you through the policies available to you and help you find the right coverage based on your needs, budget, location, and more. Contact us today!