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What is Comprehensive Insurance? And How Much Does It Cost?

Comprehensive insurance is car insurance that covers damage to your automobile caused by other incidents than accidents. It is one of the main types of car insurance that you can purchase. Unlike collision insurance which covers damage to your vehicle caused by an accident, comprehensive coverage covers incidents such as theft, vandalism, natural disasters, fires, and more. You definitely need this type of car insurance coverage to protect your car and your finances.

What Is Comprehensive Insurance?

Comprehensive insurance is one of the primary insurance types. Damage that occurs to your vehicle that is not caused by a car accident typically falls into this category. Full coverage policies typically include comprehensive insurance.  Furthermore, you are required to have comprehensive and collision insurance if you lease or finance a car.

What Comprehensive Insurance Covers

Comprehensive insurance covers damage to your car that is not the result of an accident or collision. If your car is stolen or vandalized, you need comprehensive insurance to cover the damages. Additionally, comprehensive coverage applies if a flying rock or falling tree due to a storm breaks your windshield. Damage caused by animals is in the comprehensive category. Fire damages also falls into this category. Damages from natural disasters such as earthquakes and tornadoes are another inclusion. Comprehensive insurance also covers flood damage. People living in the Gulf states may find this inclusion important.

>>MORE: Does Car Insurance Cover Vandalism?

What Comprehensive Insurance Does Not Cover?

Comprehensive insurance does not cover damages arising from a car accident. If another car strikes your car, your collision insurance should cover the damage. The same holds true if you strike another car or accidentally back into something. Comprehensive vehicle insurance also does not cover hit and run accidents.

Comprehensive insurance also will not cover expenses if the act leading to the damages was intentional by the insured. Moreover, if you are engaged in business with the vehicle, your comprehensive insurance may not cover an incident. Giving rides for a fare is an example which insurers tend to not cover with comprehensive insurance. Thus, Uber and Lyft drivers cannot rely on comprehensive insurance when transporting others.

You might assume that mechanical failures and repairs are covered by comprehensive vehicle insurance. Comprehensive insurance does not cover mechanical repairs. Your car’s warranty, however, may cover these repairs.

How Much is Comprehensive Insurance?

Comprehensive insurance by itself typically adds an additional $150 – $200 to your annual car insurance premium. State minimum liability insurance costs an average of $700 a year. This means that you are adding an additional 17 – 22% to your insurance costs. If you live in an area with high theft or inclement weather, this additional $200 may be well worth it because comprehensive insurance covers up to the Actual Cash Value (ACV) of your car minus a deductible.

A deductible is the amount you have to pay before your comprehensive insurance kicks in. For example, if your car was worth $25,000 brand new and is now worth $15,000 after a few years of depreciation, you will be reimbursed for $15,000 minus the deductible amount. This deductible typically ranges from $500 up to $2,000. If you choose comprehensive insurance with a higher out-of-pocket deductible, your annual cost of comprehensive insurance will be lower. If your car gets totaled from a tree falling on it, that $200 annual cost is well worth it since the ACV of your car is $15,000.

How Comprehensive Insurance Differs from Collision Insurance?

Both comprehensive and collision insurance cover damage that occurs to your vehicle.  Collision insurance, however, solely covers damage to your car when it is involved in an accident. Comprehensive insurance covers damages arising from everything else with some exclusions. You should have both comprehensive and collision insurance because they cover different occurrences. Furthermore, many insurance companies require you to have comprehensive car insurance in order to purchase collision coverage.

Do You Need Comprehensive Insurance?

Yes, you do need comprehensive insurance.  Insurers recommend that you purchase comprehensive insurance any time your car has significant value.  

You never know if or when you may need this type of insurance. If your car is stolen, you need comprehensive coverage to cover the value of your vehicle. Furthermore, damages such as a shattered windshield are common occurrences which can be expensive. Additionally, if you are financing or leasing a car, your financing or lease terms will typically require you to maintain a minimum amount of comprehensive coverage.

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