What is comprehensive auto insurance coverage? How does it work? How is it different than collision? This article quickly answers your questions.
The professionals at IHS Insurance Agency frequently receive inquiries about comprehensive auto coverage, including what it provides, how much it costs, and what happens to rates after a claim is filed.
We’ve made it easier to quickly find accurate answers by sectioning this article into the most common questions. Let’s dive in!
How Does Comprehensive Auto Coverage Work?
Imagine that your brand new car sits comfortably in your garage while you relax on your couch. You suddenly hear a loud crash as the ceiling caves in and releases a cascade of wood, sheetrock, and other debris on top.
After everything’s said and done, the repair bill totals more than $10,000, which is covered under the “falling objects” provision of the comprehensive portion of your auto policy. Other examples of falling objects could include hail, trees, or even road debris kicked up from other vehicles.
Comprehensive—often referred to as “other than collision,” since it picks up most causes of loss not covered under the collision portion of your auto policy—also includes:
- Glass and windshield
- Natural disaster/weather (hail, flood, lightning, hurricanes, tornadoes, earthquake, etc.)
- Animal-related damage
- Civil disturbance (e.g., riots)
Is Comprehensive Coverage Mandatory?
Technically, comprehensive coverage is optional and isn’t required in any state.
However, if your vehicle is financed or leased, the bank will almost certainly require that you carry comprehensive coverage, which protects their financial interest if the car is damaged. Details like these are spelled in your paperwork.
Once your car is paid off, you can then choose whether or not to maintain comprehensive coverage.
Can You Have Comprehensive Coverage on Your Auto Policy by Itself?
The short answer? It depends on your auto insurance carrier.
In most instances, though, insurance companies prefer that you carry comprehensive and collision coverage simultaneously. If you’d like to find out more about your specific carrier, call the friendly IHS Insurance staff at 866-480-5063, or send an email to firstname.lastname@example.org.
Is Comprehensive the Same as Full Coverage?
Within the insurance industry, there’s technically no such thing as a “full coverage” auto policy.
With this said, the term is commonly used informally to reference an automobile that carries a combination of liability, comprehensive, and collision insurance coverage. Therefore, a policy that only carries comprehensive would not be considered “full coverage.”
Is There a Comprehensive Coverage Limit?
Just like there are different comprehensive coverage guidelines between carriers, there are various policy provisions that can make significant differences in how much an auto policy pays out from a covered loss.
In general, though, most vehicles covered under an auto policy are insured on an actual cash value (ACV) basis. Or, in layman’s terms, based on the current market value.
Comparatively, you may be able to increase this limit by adding a replacement-cost endorsement to your policy. As the name implies, this could pay to replace your vehicle with a new one of like kind and quality if your current car is totaled.
Do Comprehensive Claims Increase Your Auto Insurance Rates?
Whether or not a comprehensive claim increases your auto insurance premium—and precisely how much—depends on your carrier’s rate filing with the state, in conjunction with any other accidents listed under your policy. Some companies might not charge at all, while others could increase your rates dramatically.
The good news is that chargeable comprehensive claims on a policy typically fall off after three to five years, so they can’t impact rates indefinitely.
Does Comprehensive Coverage Have a Deductible?
When adding comprehensive coverage to your auto policy, you’ll typically start by selecting a deductible that meets your financial needs (more about this below).
Deductibles work by putting some financial burden on you during a covered comprehensive claim. For example, continuing with our $10,000 garage ceiling disaster from earlier, if you had a $1,000 deductible, your insurance company would cover $9,000 of the claim, and you’d be responsible for the remainder.
How Much Does Comprehensive Auto Coverage Cost?
Compared to collision, comprehensive coverage typically comes at a reasonable price. And in overly simplistic terms, what you pay will depend on a combination of the vehicle insured, along with your driving history.
There’s also an inverse relationship between your comprehensive deductible and what you’ll pay for the coverage. In other words, increasing your deductible will reduce your comprehensive coverage rate and vice-versa.
Is Comprehensive Coverage Worth Having?
Auto insurance is a must-have. However, whether or not comprehensive coverage will deliver value under your policy will depend on your unique combination of needs and preferences.
Here’s a quick, high-level checklist to help you better decide:
- Is Your Vehicle Financed?
As mentioned earlier, if your car is financed or leased, the bank will require comprehensive and collision coverage. Your only option is to adjust deductibles to meet your budget.
If your vehicle isn’t financed or leased, though, deciding whether or not to maintain the coverage can be more nuanced, which we’ll discuss below.
- How Old is Your Car?
Comprehensive is based around the value of your car, so one significant factor to keep in mind is that the coverage decreases in value as your car depreciates. Therefore, comprehensive is typically ideal for late-model vehicles.
- Do You Drive a Lot?
If you drive regularly and for long distances, whether commuting or for travel, greater time on the road increases your chances of being involved in an accident—and therefore getting a lot of bang-for-your-buck from carrying comprehensive coverage on your policy.
- Do You Live in a ‘High-Risk’ Area?
If you live in an area that experiences frequent auto claims (collisions, severe weather, vandalism, theft, etc.), you’ll likely pay higher rates for comprehensive. However, the coverage could deliver a great deal of value if your car’s damaged.
- What’s Your Financial Situation?
Last, but certainly not least: Could you afford to pay for an accident out of pocket, or to replace your car altogether? If so, you might not achieve much value by paying to carry comprehensive coverage under your auto policy.
Want to Learn More About Auto Comprehensive Coverage?
According to the Insurance Information Institute, 2017 data show that 77 percent of insured drivers purchased comprehensive coverage.
Are you on the fence about whether or not it’s right for you, though? Or, do you wonder if there’s a way to pay less for your current comprehensive coverage?
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