Comprehensive insurance coverage is a coverage that is designed to help reimburse you for any damages or losses you may encounter in the event of a covered loss to your vehicle.
In this post we will go over what comprehensive insurance is and whether or not it is worth it for you to include in your auto insurance policy.
What Does Comprehensive Insurance Cover?
Comprehensive coverage can pay to cover many different kinds of damages to your car caused by events out of your control. Common damages comprehensive auto insurance covers include:
- Damages caused by natural disasters (hurricanes, tornadoes, hail damage, lightning strikes, wind damage, flash flooding, earthquakes, landslides)
- Fires or explosions
- Vandalism and riots
- Damage caused by other vehicles (ex: a large item hits your car that came from the bed of a truck in front of you)
- Damage from falling objects (ex: a tree limb or debris from an overpass falls on your hood)
- Chipped or cracked glass
Now you can understand why it’s so important to make sure you have the proper coverages on your auto policy. If you’re not sure whether comprehensive coverage is on your auto policy or not, give us a call today! We’d be happy to help sort things out.
How Does Comprehensive Car Insurance Work?
Now that we’ve covered the basics of comprehensive coverage, let’s talk about exactly how it works. Here’s a general overview of what you should expect to happen in the event you need to utilize your comprehensive coverage.
- You File a Claim and Pay Your Deductible Generally, when purchasing a comprehensive insurance policy, 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 to the body shop if your vehicle is damaged in a situation that your comprehensive insurance covers.
- Your Car Gets Fixed After you pay the body shop your deductible, the insurance company will then pay up to the policy limit that was agreed upon. The policy limit is generally equal to the amount the car is worth, known as actual cash value (ACV). The ACV or your vehicle is vastly different from the original sticker price that you may have paid for it and is why we will recommend you invest in GAP insurance if you owe more than the vehicle is currently worth.
Below are a couple examples of what it looks like to use your comprehensive coverage if necessary.
Example 1: Staying Under the Policy Limit
Bill is driving down the road and hits an animal that causes $1,000 worth of damage to his car. His car is worth $8,000. Since the total cost to repair the damage is less than the total value of his vehicle, Bob’s insurance company will end up paying less than the policy limit. This means that all Bob has to do is pay his $500 deductible and the insurance company will take care of the rest the repair which would be $500. Keep in mind, sometimes it is a good idea to pay small claims out of pocket rather than filing a small claim that goes on your universal claims loss underwriting experience report (CLUE).
Example 2: Equaling the Policy Limit
Anna is about to leave for work when she realizes 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 write her a check for her comprehensive coverage policy. Her car was worth $13,000. Since she had a $1,000 comprehensive deductible, the insurance company writes her a check for $12,000 - the value of her car minus the amount that she had as a deductible.
How to Choose a Comprehensive Deductible
So now that we have covered what comprehensive coverage actually covers and how it works, it’s time to determine your deductible. Naturally, many people default to opting for a smaller deductible because they want to save money by not having to pay as much money when they have to file a claim. Unfortunately, this doesn’t pan out how many would expect.
If you opt for a low deductible your cost will be higher than if you select a larger deductible/larger out of pocket for you if you file a claim. Some common deductibles selected are $500 or $1000.
If you opt for a higher deductible, you could actually end up saving more money. While having a higher deductible may sound a bit risky, you’ll have a lower monthly payment on your premiums. In this situation, the longer you are able to go without filing a claim, the more money you will save!
Is Comprehensive Coverage Really Worth It?
Comprehensive coverage is optional IF you don’t have a loan or lease on the vehicle so you may still be wondering if adding it to your auto insurance plan is really worth it. The thing to keep in mind, is that auto claims don’t always involve another vehicle. The fact is, it is completely possible that you hit a wild animal on your way home from work, a large item falls or hits your car, or your car is stolen or vandalized. The good news is that comprehensive insurance covers damage caused in these situations. With comprehensive coverage, you can rest assured that you will not be left with an unexpected and costly bill in the event your vehicle is damaged.
Finding the Best Comprehensive Insurance Policy
Comprehensive insurance is a one of the most important parts of any auto insurance policy. Simply by reading this article you are taking a step in the right direction. If you check with your local independent insurance agents first, we can shop around for the best rate offer for you. As Arizona insurance experts, Stover Strong Insurance can help you put together a great insurance policy at a price that works with your budget. If you would like to add comprehensive coverage to your auto policy or just have someone review your policy and go over your policy coverages with you, give us a call today!