Comprehensive Coverage does not Protect Drivers Against

Despite its name, comprehensive coverage does not protect drivers against all forms of damage to their vehicles. It covers only damage from theft, vandalism, falling objects, flood, fire, animals, or natural disasters. It also covers claims in which the damage is limited to glass damage such as a cracked windshield.

Insurance providers usually offer collision and comprehensive coverage together. Both are optional under state law, but when comparing comprehensive vs. collision coverage, you should realize that they offer protection against different sorts of damage. Drivers usually will have to buy only comprehensive coverage to satisfy the requirements of their auto loan provider or leaseholder. Otherwise, drivers will have to weigh the risks of purchasing or dropping comprehensive insurance. We’ll walk you through that decision process and discuss the finer points of comprehensive auto insurance below.

What is NOT covered under comprehensive coverage?

• Collision with another car or an object such as a fence or streetlight; or damage caused by the surface of the road such as a pothole; “Collision insurance” covers such damage.
• Towing to a mechanic in case of breakdown, flat tire, or dead battery; “Roadside assistance and towing coverage” covers such services.
• Paying for a rental car if your personal vehicle is inoperable after an accident. “Rental reimbursement coverage” compensates for this expense.

Do I need comprehensive car insurance?
For the most part, comprehensive insurance is optional. No state requires drivers to carry it. However, if you have a loan or lease, many auto lenders and leaseholders will require drivers to purchase comprehensive insurance coverage.

If your auto financing is paid off, first determine the value of your vehicle. Use common sources like the Kelley Blue Book, Black Book or N.A.D.A. online guides for accurate estimates. Next, consider the following scenarios when deciding whether to purchase comprehensive auto insurance:

Scenario 1: 

You cannot afford to repair or replace your car.
Quick Answer: Buy comprehensive coverage.

Imagine a severe thunderstorm rolls through your hometown, uprooting a massive oak tree. Unexpectedly, it falls onto your car, crushing it. Could you afford to buy a new car? If not, you should probably buy comprehensive car insurance. It is a relatively inexpensive way to protect your car and finances.

Scenario 2: 

You can afford to replace your car.
Quick Answer: It depends.

If your “rainy day” fund contains enough money to replace your car, you can drop your comprehensive coverage and self-insure if you want to. But before deciding, ask yourself three questions:

How much will I save by not buying insurance?
Insurance Coverage Zip can calculate your average price of comprehensive car insurance. The price will largely be determined by how much your car is worth and the deductible you select. Unless you have a terrible driving record, you will probably save a couple hundred dollars per year by not purchasing comprehensive coverage.

How much money is at risk?

The highest amount at risk would be in the worst case — i.e. if your car is totaled, then you will need to replace it. You need to analyze the risk in terms of how much stress and financial disruption the worst-case scenario is going to cause you. By “financial disruption,” we are referring to “calculating” what portion of your retirement fund, emergency fund, or college savings would get wiped out.

What are the odds I will have to pay to repair or replace my car?

To answer that question, you should determine if you drive through hazardous areas. If so, the likelihood of damage to your car is greater.

How much does it cost? And what should the deductible be?
Every state requires drivers to carry tens of thousands of dollars of bodily injury and property damage liability coverage. These policies make up the bulk of a driver’s monthly car insurance bill. The drivers’ age, location, profession, and other factors will also affect the price of these policies to some degree.

In addition to the above factors, the value of a comprehensive car coverage policy is calculated based on the actual cash value (ACV) of the vehicle — the purchase price minus depreciation and the deductible. Because the typical car’s ACV is not worth several tens of thousands of dollars, comprehensive coverage tends to be far more inexpensive than other auto insurance coverage components.

The price of comprehensive coverage will also vary according to the size of the deductible, which typically ranges from $100 to $1,000. A deductible is the amount of money you will pay out of pocket for car repairs. Your insurance provider will cover the ACV, or the expenses in excess of that deductible, up to the policy’s limit.

Insurance Coverage Zip tells how much an average driver would pay as well as the maximum amount the insurance company would pay out if his or her car needed to be replaced.

*Premium figures assume collision coverage with $1,000 deductible, bodily injury liability policy with a limit of $50,000 per injured person and a maximum payout of $100,000 per accident, as well as a property damage liability limit of $50,000.


Hazardous areas include rural areas where deer strike and other wildlife-related accidents are common; high-crime areas where car thefts, break-ins, and vandalism are common; areas prone to natural disasters such as wildfires, floods, mudslides, tornadoes, hurricanes, or earthquakes; or busy highways where gravel and other detritus can damage your windshield.

Depending on your neighborhood, you might have to worry about some or all of these dangers. Ask yourself if you are comfortable paying a couple hundred dollars per year to compensate for such risks.

To better understand the above decision process, let’s imagine a 36-year-old single male who lives in Oakley, Calif., where the crime rate is considerably high. Let’s call him Mark. He owns a 2008 Honda Accord LX Sedan that contains only the standard package, and it’s in good condition, with 100,000 miles. According to the Kelley Blue Book, Mark’s Accord is worth approximately $7,500.

If Mark has an emergency fund of only $2,000, he should buy comprehensive coverage. However, if he has $20,000 in his fund, he first should answer the three questions discussed above before deciding.

Using the quote generator, he will see that comprehensive car insurance will cost about $120 to $180 per year. In other words, he would save approximately 2% of the value of his car by not purchasing comprehensive coverage.

Moreover, considering the fact that Mark’s neighborhood is not very safe, he might have to replace his car in case of theft or vandalism. Entire car replacement means wiping out more than a third of his emergency funds. In this situation, it is a good idea to buy comprehensive coverage.

As this chart clarifies, the larger the deductible, the more that driver will pay out of pocket. But the monthly premiums will be lower. If he or she chooses the smaller deductible, the opposite would be true. This tradeoff is true for every driver to some extent, even drivers of different ages, marital status, and driving history.

Bottom Line:
For most drivers, comprehensive coverage is relatively inexpensive considering the broad coverage the policy offers. However, unless you are financing the purchase or lease of a new car, it is not mandatory. Accordingly, you should compare comprehensive car insurance quotes to pick the right balance of costs and benefits that satisfies your budget and your appetite for risk.

Both Collision and Comprehensive Insurance - Similarities and Differences

Collision and comprehensive insurance are complementary forms of coverage that together protect your car against most forms of damage, with each covering distinct types of losses. Here’s a quick description of each:

Collision Insurance: This covers repairs to your own car when you hit another car, an object like a tree or fence, or if you drive over a surface hazard like a deep pothole. It does not cover damage to someone else’s vehicle — liability insurance will protect you against those costs.

Comprehensive Insurance: This coverage applies when your car does not actually collide with another vehicle or object – for example,  for damage caused by a fire, natural disaster, animals, falling objects, theft, vandalism, or claims limited to glass damage (such as a cracked windshield).

For more information on how they relate to each other, continue reading below.

Similarities and Differences
Although drivers will make collision and comprehensive insurance claims under different circumstances, they are otherwise very similar. Let’s review the main similarities and differences.

Similarities

• Both Collision and comprehensive insurance cover damage to your own vehicle.
• You don’t have to choose a coverage limit. The coverage limit is the actual cash value of your car
• When your car is damaged, both generally have a deductible you will be responsible for. Your insurance company will offer a range of deductibles for comprehensive and collision policies. Choosing a higher deductible will lower the cost of your premiums, but with a higher deductible, you will be responsible for more of the cost if you file a claim.
• Insurance companies typically offer comprehensive and collision packaged together, although they can also be bought separately. Some insurance providers will require the purchase of comprehensive coverage before you can buy collision coverage, but not vice versa.
• Both are optional under state laws. However, if your car is financed, your lender or leasing company will likely require you to purchase both types of coverage.

Differences

• The main difference between comprehensive and collision insurance is the damage they cover. A good rule of thumb to remember is that collision covers drivers when they are in an accident with another vehicle or they hit an object, and comprehensive covers drivers against events that are outside of their or another driver’s control.
• Collision coverage premiums are more expensive, costing as much as three times more than comprehensive coverage.
• Examples of Covered Losses
• In order to get a better handle on the two forms of coverage, let’s consider two examples:

Scenario 1
Imagine you are driving along a rural road, and you see a deer warning sign. Sure enough, a deer darts out and hits your car.

Because the collision was not caused by a driver’s action, the damage to your car will be covered by a comprehensive policy.

Scenario 2
Now, picture that same road and that same deer, only this time the deer escapes and instead causes an accident between two cars.

In this example, the car in front of you slams on its brakes to avoid the deer, but you are following too closely to stop in time, and you rear-end the other car. Collision coverage will likely pay to repair your car in this case.


How Much Will Collision and Comprehensive Cost Me?
A major factor in the price of both comprehensive and collision coverage is the value of your car. The more your insurer might have to pay if your car is totaled, the more risk the insurer has and, therefore, the more you will pay in premiums.

The table below breaks down examples of auto insurance premiums for three different cars. The sample policies include liability insurance, comprehensive coverage and collision coverage. Insurance Coverage Zip can help you determine what you are likely to pay for each form of coverage for your own car.

* Premium figures assume comprehensive and collision coverage each with a $1,000 deductible, a bodily injury liability policy with a limit of $50,000 per injured person and a maximum payout of $100,000 per accident, as well as a property damage liability limit of $50,000.