Last Updated: May 2019
Auto insurance policies typically come with several components, few of which are well understood by anyone but industry insiders. But all are important, and some are even required by state law.
One of the most mysterious auto insurance provisions is comprehensive coverage. It’s often confused with collision coverage, because the two are usually spoken of – and purchased – together.
Each one is actually a very unique type of coverage, applying in completely different situations. Comprehensive auto insurance is one type of coverage you may want to consider for your vehicle.
What is Comprehensive Auto Insurance?
Comprehensive is an auto insurance provision that covers damage to your car, for everything other than a collision with another vehicle. Basically, that’s any damage sustained while your car is not in motion.
What Does Comprehensive Cover?
The list of covered events with comprehensive insurance is surprisingly long.
Typical qualifying events include:
- Damage or total destruction by fire.
- Damage caused by hitting an animal, which is a deer in most cases. (There are more than 1.3 million collisions with animals each year.)
- Partial or complete destruction of the vehicle by riots or vandalism.
- A broken windshield, which may be caused by road debris falling off other vehicles, particularly trucks.
- Objects falling from trees, like branches or icicles. It will also provide coverage if an entire tree falls on your car.
- Damage or complete destruction as a result of natural disasters. This can include flooding, earthquakes, hurricanes, tornadoes, hailstorms, and even volcanic eruptions.
Theft is another covered event. Comprehensive can cover you if your vehicle is stolen, by paying the replacement cost of the vehicle.
But it can also cover for specific components in your vehicle. This can include your car’s sound system, safety equipment, or any other potential removable equipment that’s related to the operation of the vehicle.
The above is just a list of the hazards typically covered by comprehensive coverage. Each auto insurance policy may be a little bit different.
Rather than just looking for the lowest cost comprehensive coverage, instead also carefully review the list of covered events.
If the list seems too short, or it excludes hazards you’re aware of, or are not uncommon in your geographic location, you may need to look at a different policy.
The basic rule of thumb with collision coverage – or any other type of insurance policy – is if a hazard isn’t specifically listed in the policy as a covered event, it won’t be covered.
The time to find that out is before you have that kind of event.
What Doesn’t Comprehensive Cover?
Comprehensive coverage doesn’t apply if a hazard is the result of damage or loss sustained through contact with another vehicle.
For the most part, comprehensive applies to events that occur while the vehicle isn’t in motion. That means if you damage your car by hitting a tree, utility pole, or road sign, it won’t be covered by comprehensive.
Comprehensive also doesn’t apply to liabilities incurred as a result of personal injury.
Whether the injury is to yourself or to the driver of another vehicle, or to a passenger traveling in your vehicle, comprehensive doesn’t apply. Those hazards are covered by your basic auto insurance liability coverage.
Other hazards not covered by comprehensive include:
- Medical payments
- Legal expenses
- Rental cars (while your car is being repaired)
- Personal property coverage (valuables stored in your car, but not related to your car)
There are other forms of coverage that can be added to an auto insurance policy which will cover the above hazards.
However, theft of personal property is usually covered by homeowner’s or renter’s insurance, and not through your auto insurance policy.
What’s the Difference Between Comprehensive and Collision Coverage?
From everything covered so far, it’s clear comprehensive is limited primarily to damage or complete loss sustained as a result of non-moving events. Collision is the coverage specifically designed for hazards sustained while the vehicle is moving.
First and foremost, that includes damage sustained by hitting another vehicle. Collision applies whether the vehicle you hit is moving, or even if it’s parked.
It also extends to cover damage caused by hitting a stationary object, like a fence, a mailbox, a utility pole, or even a building.
Collision can also apply to less obvious hazards, like damage caused by driving through a pothole in the road. Another example is if you’re driving on an ice-covered or rain-soaked road and lose control of your vehicle, causing it to flip over.
The confusion between collision and comprehensive coverage comes from the fact that the two are usually purchased at the same time.
But, as you can see, each policy provision covers two very different sets of potential hazards.
Why Buy Comprehensive Coverage?
Auto insurance coverage is required in all states except New Hampshire. However, no state requires the driver to maintain comprehensive coverage. That said, there are other reasons why you may either be required to have it, or simply prefer to.
If you purchase your car using financing, your lender will require both comprehensive and collision coverage.
That’s because the lender will require these coverages to protect the value of your car.
Since the car serves as collateral for the loan, lenders are within their rights to make comprehensive coverage a requirement. For all the same reasons, comprehensive will also be required if you lease your vehicle.
But as a matter of personal preference, you want to have comprehensive coverage on a new or relatively late model vehicle. The hazards typically covered by comprehensive can happen to any vehicle, anywhere in the country.
Comprehensive will protect your investment in your vehicle, even if you don’t have a loan on the car.
It’s a unique form of coverage, one that protects against very specific hazards.
Even if you have all the other forms of coverage typically included in an auto insurance policy, a lack of comprehensive will leave you completely exposed to the costs of repair or replacement of your vehicle for non-moving hazards.
When You Might Not Want Comprehensive Coverage
Most drivers do opt to include comprehensive coverage. But there are a few situations where you may not want the coverage, or you might even choose to drop it if you already have it.
The value of comprehensive, much like collision coverage, depends on the value of your vehicle.
If you have an older car that’s worth no more than say, $2,000, the extra premium cost of both collision and comprehensive may not be worth having.
For example, let’s say your car is worth $2,000 and you have a $500 deductible. The annual cost of maintaining collision and comprehensive coverage is $600.
Should your vehicle sustain damage that would require more than $1,500 to repair, the insurance company will “total” it.
That is, they’ll pay the maximum value of $1,500 ($2,000 less your $500 deductible) – even if the cost of repairs is $3,000.
You’ll have to decide if you’d be better off paying $600 per year for the coverage, or dropping it and putting the money into an emergency fund. After all, after just 2 ½ years, you’d have enough saved to cover the highest amount the insurance company would pay a claim for.
How to Add Comprehensive Coverage to Your Auto Insurance Policy
Comprehensive coverage is a typical provision offered by all of the best auto insurance companies and it will generally be purchased at the same time.
The coverage is based on the value of the vehicle. Naturally, the higher the value, the higher the premium will be. The value is determined based on the actual cash value (ACV) of your vehicle.
That’s the purchase price of the vehicle, less depreciation.
If you purchase a vehicle brand-new for $30,000, the comprehensive cost will be higher than it will be five years later, when the vehicle might be worth only $15,000. (Collision coverage works the same way, though basic auto liability is based on the dollar amount of coverage you choose.)
The add-on cost of comprehensive coverage can be anywhere from $150 per year, to more than $1,000 for higher-priced vehicles.
Since the value of the vehicle is the major factor determining the cost of both comprehensive and collision coverage, you should factor that into the price of the vehicle you’re purchasing. The lower the cost, the lower the premium will be.
Apart from buying a less expensive vehicle, the best way to lower comprehensive premium costs is by taking a large deductible. You can achieve substantial savings by taking a $1,000 deductible rather than a $500 deductible.
Comprehensive coverage is just one part of the auto insurance premium structure, and not the most significant.
If you’re looking to purchase an auto insurance policy with the best coverage – and the lowest premium – we’d love to help you.
As an independent agency, we work with all sorts of auto insurance providers and provide you with quotes on comprehensive and other types of auto insurance, as well as advice to help you find the best policy for your needs.