What is Comprehensive Insurance Coverage & Do I Need It?

​Comprehensive insurance coverage is just one of many pieces that are part of your car insurance policy. With so many different moving pieces, insurance can understandably become very confusing.

Would you be able to tell someone the difference between comprehensive and collision car insurance coverage? Do you know what each of those covers in the event your vehicle is damaged?

The purpose of this post is to help you understand 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 just about any random damage to your car caused by events out of your control. Some of the most common damages comprehensive auto insurance covers include damages caused by natural disasters (hurricanes, tornadoes, hail damage, lightning strikes, wind damage, and flash flooding), earthquakes and landslides, fires or explosions, vandalism, riots, and theft of your vehicle. Comprehensive insurance may also cover damage inflicted from other vehicles (for example a dump truck or semi throwing large rocks from its trailer), damage from falling objects (such as a tree limb or debris from an overpass or construction site) and chipped or cracked glass.


As you can see, comprehensive coverage serves many different purposes and can help provide relief for any unforeseen event that happens to damage your car!

​How Does Comprehensive Car Insurance Work?
 
So now we have gone over the basics of what comprehensive car insurance is capable of covering, but how does it work? Here’s a general process of what happens when you have this coverage on your auto policy.

1. You File a Claim and Pay Your Deductible

 
Generally, when you purchase a comprehensive insurance policy you will be asked to choose a comprehensive deductible. This 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.

1. Your Car Gets Fixed

 
After you pay your insurance company the deductible, they will in turn 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. Actual cash value is vastly different from the original sticker price that you may have paid for it and this is why we would recommend GAP insurance.
 
Below are some examples of common situations where using your comprehensive coverage may be necessary.
 
Situation 1: Staying Under the Policy Limit
 
Bob’s driving down the road and hits an animal that causes $1,500 worth of damage to his car. His car is worth $7,000. 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 is $1000.
 
Situation 2: Equaling the Policy Limit
 
Sarah is on her way out the door one morning and 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 cut her a check for her comprehensive coverage policy. Her car was worth $15,000. Since she had a $1000 comprehensive deductible, the insurance company writes her a check for $14000 - the value of her car minus the amount that she had as a deductible.

In each of these situations, comprehensive coverage saved the person significant amounts of money.

​How to Choose a Comprehensive Deductible
 
At this point, like many others, you’re probably thinking, “I want to keep my deductible as low as possible. How do I do that?”
 
Unfortunately, this doesn’t pan out how many would expect.
 
With a low deductible, your insurance company is more likely to lose money in the event you get in an accident. To help themselves offset that risk, they will in turn charge you a higher premium. This means that you’ll be paying more for coverage. So, the longer you go without having to file a claim, the more money they can make from collecting your premium.

The flip side of this, instead of having a low deductible would obviously be having a high one. While having a higher deductible may sound like a negative, the lower monthly payment on your premiums is why most independent insurance agents will recommend setting up your policy this way. In this situation, the longer you are able to go without filing a claim, the more money you will save!

Why Do I Need Comprehensive Coverage?
 
You may still be wondering if going through with this optional coverage is worth adding to your insurance plan. At the end of the day, auto accidents happen. The thing to keep in mind, though, is that oftentimes they don’t involve another vehicle. Accidents are unexpected and can include the chance of falling objects, theft, vandalism, or even hitting a wild animal on your way home from work. Comprehensive insurance covers damage caused in these situations and can help ensure that you aren’t left with a huge bill that you weren’t planning on having simply because you only have liability or collision coverage.
 
Finding the Best Comprehensive Insurance Policy
 
Comprehensive insurance is a necessary part of any auto insurance policy. Unfortunately, because many of the big insurance companies know this, they will try and sell you this insurance option at a premium. Fortunately, comprehensive coverage can actually be affordable if you shop around and check with your local independent insurance agents first. As Wisconsin insurance experts, Townsend Insurance can help you put together a great insurance policy at a price that works with your budget. We truly hope this article was helpful in helping you make a decision. If you’d like to add this coverage to your policy or just have some additional questions, give us a call today!