- Comprehensive auto insurance protects your car from non-collision-type damage, such as theft, vandalism, natural disasters or if you hit an animal.
- Insurance payouts are limited to your car’s actual cash value, which may not cover the cost of an up-to-date replacement.
- Comprehensive auto insurance is optional for car owners but often required for leased vehicles.
- Whether or not to buy comprehensive auto could depend on a variety of factors, such as where you live, the condition of your car and your deductible.
Hailstorms. A deer in the road. Falling objects. Theft. Natural disasters. If any of these unfortunate events should happen to your car, would you be covered?
Typically there are three components to your auto insurance policy: liability (usually required by law), collision and comprehensive. As the name indicates, collision insurance covers you in the event of a crash. Comprehensive auto insurance, on the other hand, helps cover the cost of damages to your vehicle from events not part of a collision. Sometimes referred to as “other than collision” coverage, this type of insurance is reserved for situations like vandalism, theft, natural disasters and more.
“Comprehensive auto insurance essentially helps protect you from unexpected events besides a car crash,” says Dave Reinhart, a CPA with Smoker Smith & Associates. “It’s worth considering, especially if you live in an area that’s prone to bad weather.”
Since comprehensive coverage is an optional addition to your auto insurance policy, you have a decision to make: Should you include comprehensive auto insurance on your auto policy? Most car owners do, with more than two-thirds buying the coverage nationwide. Read on to see if it’s right for your particular situation.
What is and isn’t covered under comprehensive auto insurance
Comprehensive auto insurance commonly covers the concerns listed below:
Natural disasters (tornadoes, floods, hurricanes, earthquakes, etc.)
Falling objects (tree branches, ice, projectiles, etc.)
Glass breakage and windshield damage
Hitting an animal
Fire and explosions
Rocks or objects fallen off or kicked up by other cars
Civil disturbances (riots, etc.)
Comprehensive auto insurance doesn’t cover the following:
Damage your vehicle sustained from a collision with another car or stationary object. (These expenses are normally covered as part of your collision policy.)
Damage done to another individual’s vehicle incurred in a crash, as well as the medical expenses and lost income for drivers and passengers in either vehicle involved in an accident. (These expenses usually fall under the liability section of your policy.)
Damages sustained as part of normal wear and tear on your car. Typical pieces of auto equipment that may require routine replacement and are not covered include:
Brakes and tires
Belts and hoses
Understanding your costs
The average cost of comprehensive auto insurance is about $134 a year, which—considering the hazards that may await—could be cost-effective. At the time you get or renew your auto insurance policy, you can obtain comprehensive coverage. You’ll also select a deductible, defined as the amount of money that you can expect to pay out of pocket when you file a covered claim under the policy.
For example: If your deductible is $1,000, and your car is caught in a hailstorm that causes $2,000 of damage, you can expect to pay $1,000 out of pocket and split the cost of the repairs evenly with your insurance provider. If damages totaled $2,500 under this same scenario, your insurance provider would instead pay $1,500—the majority of the vehicle repair bill as insured under the covered claim.
Be aware though that your comprehensive auto insurance deductible and limit will also be defined separately from your auto insurance policy’s collision coverage deductible and limit.
Comprehensive auto coverage applies up to a maximum limit—specifically, the actual cash value of your vehicle (that’s how much it’s worth today, factoring in depreciation). This amount is negotiable in the event that you disagree with the valuation.
As a general rule, however, the higher the comprehensive coverage deductible you choose, the less your monthly insurance premium payments will be, as you’re essentially taking on more risk. Bearing this in mind, you may wish to opt for a lower comprehensive deductible and increase the amount you’d pay for coverage instead.
Should you get comprehensive coverage?
A few points to consider concerning coverage as you debate whether or not to purchase comprehensive auto insurance:
It may be required by your auto lender. If you’re financing or leasing a vehicle, your lender may require you to hold comprehensive auto insurance until your automobile is fully paid off.
It may not cover the full cost of vehicle replacement. Consider checking the Kelley Blue Book value of your vehicle to find out more. After all, the actual cash value of your car (the maximum amount that an insurer will pay out) may be less than the cost of acquiring a new make and model. In other words, even after cashing an insurance check, buying a new vehicle may require you to dip into your own pocketbook.
It may come with higher premiums attached. Comprehensive coverage is optional for those who own their vehicles. If your vehicle’s cash value is on the lower side and you have a higher deductible, it may not be worth your trouble. Likewise, if you don’t live in an area that’s prone to natural disasters or home to a significant number of animal habitats, you might opt to forgo obtaining it.
“Millions of drivers count on comprehensive auto insurance every day,” says Reinhart. “At the same time, it’s not for everyone. As I advise clients, taking time to think about the value of your car, local driving conditions and the types of hazards that you expect to encounter on your daily commute can help make the decision to proceed or pass on it simpler.”