Comprehensive insurance coverage is an optional addition to your car insurance policy designed to repair or replace a vehicle that has been damaged in a variety of scenarios except for a collision or rolling over.
Sounds simple enough right? Well, not exactly. Do you know what the difference between comprehensive and collision car insurance coverage is? Do you know what each of those coverages do in the event of damage to your vehicle?
To put your mind at ease, we will help explain the ins and outs of comprehensive insurance and whether or not it is worth adding to your car insurance plan.
What Does Comprehensive Insurance Cover?
Comprehensive coverage covers damage to your car in almost any situation that you could imagine. Some of the most common damages that comprehensive auto insurance covers include:
- Damage due to hitting or getting hit by an animal
- Weather damage (hurricanes, tornadoes, hail damage, lightning strikes, wind damage, and flash flooding)
- Damage from earthquakes, landslides, fires or explosions
- Damage caused by vandalism, riots, or theft of your vehicle
- Damage inflicted from other vehicles (example: large rocks or debris being thrown from a truck or semi)
- Chipped or cracked glass
As you can see, comprehensive coverage is a great addition that you may want to have as part of your car insurance policy in case an unforeseen situation happens that damages your car!
What Doesn’t Comprehensive Insurance Cover?
When damage has been done to your vehicle, the most important thing to establish is who’s at fault. If you’re deemed responsible for an accident, whether it was with another car or not, your comprehensive coverage will most likely not protect you. Speak with one of our agents if you are unsure of what to do. At PNW Insurance Group, we offer a range of car insurance options in Washington state designed to protect your vehicle and give you peace of mind in these kind of situations.
How Does Comprehensive Car Insurance Work?
Okay, so now that you understand what comprehensive coverage will help pay for, you’re probably wondering how it actually functions as a part of your car insurance plan.
Generally, when you purchase comprehensive auto insurance, you will be asked to choose a comprehensive deductible. This deductible is the amount of money that you will be asked to pay out of pocket if your vehicle is damaged in a situation that your comprehensive insurance covers.
Your Policy Limit
Once you pay your deductible, your insurance company will, in turn, pay up to the policy limit that was agreed upon. Wait a minute, what’s a policy limit? The policy limit is, generally, equal to the amount the car is worth which is also known as the actual cash value (ACV). Actual cash value is vastly different from the original sticker price that you may have paid and is why we recommend GAP insurance to those who have recently purchased a newer car.
Examples of Comprehensive Coverage Being Used
Below are a couple of example situations when comprehensive coverage may come into play.
- Scenario #1: Staying Underneath The Policy Limit
Tim’s vehicle is worth $6,000. He hit a deer and the collision caused $1,800 worth of damage to his car. Since the total cost to repair the vehicle is less than the total value of Jerry’s vehicle, Tim’s insurance company will end up paying less than the policy limit. In this situation, Tim only has to pay his $500 deductible while the insurance company agrees to pay the other $1300 for the repair.
- Scenario #2: Equaling The Policy Limit
Alex’s car is worth $17,000. On her way out the door one morning, she discovers that her vehicle has been stolen. After several weeks go by and the police are unable to recover her vehicle, the insurance company agrees to give her a check for since she has comprehensive coverage on her policy. With her $1,000 comprehensive deductible, the insurance company ends up writing her a check for $16,000 – the value of her car minus the deductible she paid.
In both of these situations comprehensive coverage saved the car owners a significant amount of money. If you’re wondering why the two people in these scenarios had a different deductible amount, keep reading. We’re going to cover what it is and how to choose one.
How To Choose a Comprehensive Coverage Deductible
Now that we’ve gone over some examples, you might be thinking “I want a low deductible like Tim, so I don’t have to pay as much!” Unfortunately, this doesn’t end up working how many would expect.
Low Deductible Usually Translates to a High Premium
When decide you want a low deductible, your insurance company is more likely to lose money if you get into an accident. They need to offset this risk somehow which means they will end up charging you a higher premium. What this means is that you’ll be paying more money for the same coverage. And, in addition, the longer you go without having to file a claim, the more money your insurance company will make from collecting your premium.
High Deductible Usually Translates to a Low Premium
The alternative to this would obviously to have a high deductible. Naturally, you’re wondering why anyone would want to pay more for something if they didn’t have to. In the context of comprehensive coverage, having a higher deductible actually translates to having a lower monthly payment on your premium. This is why most independent insurance agents will recommend setting up your policy with a higher deductible. The longer you are able to go without filing a claim, the more money you can save!
As we continue to discuss the complexity of auto insurance, keep in mind that it’s always important to shop around and get a quote from an independent agency like PNW Insurance Group. Coverage may vary by state and even by zip code, so it’s important to read related articles and take anything you learn for purely informational purposes and not as clear insurance guidelines.
Why Do I Need Comprehensive Coverage?
Technically, the average person doesn’t need comprehensive insurance because they can operate a vehicle without one. But, if you aren’t convinced at this point that going through with this optional coverage is worth adding to your insurance plan, then you should keep in mind that car accidents oftentimes don’t involve a collision with another vehicle.
Like we mentioned earlier, accidents are unexpected and may include the chance of falling objects, theft, vandalism, or even hitting a wild animal on your way home from work. Comprehensive insurance is designed to cover the damage caused in these types of situations. If you want to ensure that you aren’t left out to dry because you only have liability or collision coverage, then you do, in fact, need to add comprehensive coverage as well.
Finding the Best Comprehensive Insurance Policy
Comprehensive insurance is a necessary part of any auto insurance policy. Big insurance companies know this and will, unfortunately, try and sell you this insurance option at a high rate. Fortunately, comprehensive coverage can be affordable if you shop around and check with your local independent insurance agents first.
As insurance nerds, PNW Insurance Group can help put together a stellar insurance policy that includes all three of the insurance types just mentioned at a price that works with your budget. If you’d like to add comprehensive coverage to your auto insurance policy, give us a call or get a quote online today! Either way, we’ll make sure to present you with some of the best insurance options on the market at no extra cost to you.