Clarifying Comprehensive Coverage
When the subject of auto insurance comes up, the first thing you might think of is the must-have, minimum-level coverage required to drive legally: liability insurance. This type of insurance helps cover expenses incurred by other parties, in the case that you cause an accident.
The next type of coverage you might think of is the one that covers repairs of your car when you are the cause of an accident: collision coverage.
But what about comprehensive coverage? What exactly is it, and should you include it in your auto insurance package?
Basics of Comprehensive Coverage
Comprehensive coverage takes care of damage to your car that you might experience outside of an automobile accident, generally in the categories of mischief, crime, and natural and manmade hazards. Here are just a few scenarios of damage that would be covered by comprehensive coverage.
- Someone hits a home run at the local baseball field … and the ball lands on your windshield.
- You wake up after a night of heavy rains… to discover that your car is a few miles downriver.
- A disgruntled employee decides to take out his frustrations on your paint job.
- You and a large deer have an unfortunate meeting late at night on a country road.
Because comprehensive coverage fills in the gaps not covered by liability or collision coverage, it is an essential part of any full coverage policy. After all, a collision with an animal or massive vandalism to your car could easily cost you as much as damage from a collision.
How much the comprehensive part of your policy will cover depends on its limits, which are usually determined by how much your car is actually worth. Higher-value cars can be insured for higher amounts. More coverage generally means a higher premium per month, which you can offset by selecting a higher deductible—the amount that will come out of your pocket before coverage kicks in.
Do You Need Comprehensive Coverage?
If you are leasing a car, the answer is simply “yes”—it’s required as a term of your lease agreement for most cars. For car owners, however, the answer to this question depends on several factors:
- Is your automobile relatively new and/or expensive?
- Do you live or work in a high-crime area?
- Do you keep your car secure in a garage, or is it parked outside?
- Do you live in an area where collisions with deer or other large animals are common?
- Do you often experience severe weather such as hail or floods?
- How much do you have on hand right now for repairs to or replacement of your car?
Answering these questions will help you determine whether or not to carry comprehensive on your automobile.
Also, keep in mind that comprehensive coverage does not cover expenses such as roadside assistance and rental reimbursement. You must determine your acceptable level of risk and how much you can reasonably pay both out of pocket and in monthly premiums.
The good news is that auto insurance carriers are working hard to attract new customers, and deals abound on full coverage insurance. If your location or driving habits leave you vulnerable to the damage covered by comprehensive coverage, a full coverage policy could give you the ultimate peace of mind and save you from bank-breaking loss should the worst happen.