Comprehensive insurance covers the cost of your vehicle if it is damaged by natural disasters, fire, riots, vandalism, etc. It is also known as ‘other than collision’ coverage as it pays for the cost that occurred by anything except a traffic collision/accident.
Comprehensive insurance is optional if you own the car. But if you are financing or lending a car, your lender may require you to buy the insurance. Let’s discuss in detail what comprehensive insurance is and what it covers.
What comprehensive insurance covers?
This insurance pays for the following incidents,
- Natural disasters, which include earthquakes, hail, floods etc
- Vehicle theft
- Vandalized vehicle
- Tree limbs or tree falls
- Fire or explosions
- Got hit by animals
As you can see, it covers many accidents that are not traffic-related. However, there are many accident incidents that comprehensive coverage does not cover. Such as,
- Damage to your car due to collision with another vehicle
- Damage you cause to others while driving
- Medical care
- Damage to the vehicle due to other objects or potholes
- Legal cost
Who Needs Comprehensive Insurance
Comprehensive coverage is not mandatory; hence, you can avoid it if your car is old. You will only get reimbursed for the actual cash value of the car minus the deductibles, which is not profitable in most old cars.
If you own a new or costly car, you can consider this coverage, which will give you peace of mind while driving. Also, if you finance your new car, you may be required to purchase this insurance along with collision coverage.
How Does Comprehensive Insurance Work
Comprehensive insurance comes with a deductible. Most companies charge you a deductible when you file a claim for a comprehensive insurance policy. The deductible amount is the amount you pay upfront, and your insurer will pay the rest of the covered damage cost, which will be up to your car’s current market value.
For example, let’s assume that your car’s current value is $4000 and you pay a deductible of $400. On a bad day, a dear hits your car, and the damage to the car is estimated at about $3000. Now, when you file a claim under comprehensive insurance, you will need to pay $400 upfront while your insurer will pay the remaining damage cost amount of $2500.
How much does comprehensive coverage cost?
The cost of comprehensive coverage varies, as many companies sell collision and comprehensive insurance as a package with other mandatory state insurance. According to studies, drivers can expect to pay an average of $150 a year for this insurance coverage. Vehicle cost, driving history, and the area you live in are other factors that decide the cost of comprehensive coverage.
Conclusion
Although comprehensive coverage is not mandatory, you can consider adding it to your policy if you are getting a good deal. You can take the help of insurance agents to bag good deals. Make sure to research which companies provide good insurance before buying it. Also, skipping it if you are using an old model car is better, as you will not benefit much. But remember, skipping on this insurance coverage may result in a steep repair bill if your car gets damaged. You may never need it, but on a bad day, it may end up taking a big toll on your pocket.