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You get into your car in the morning and discover someone has stolen your hubcaps. On your way to work, a rock kicks up and cracks your windshield. During a windstorm, a huge tree branch falls on your car as it sits in your driveway. What do all these events have in common? They're all covered by comprehensive insurance.
Comprehensive car insurance covers your vehicle in the event of damage and disasters not related to a collision. But how does comprehensive car insurance work, and do you really need it? Read on.
What Does Comprehensive Car Insurance Cover?
Simply put, comprehensive insurance covers bad things that happen to your car when you're not driving it. This includes the theft of your vehicle or damage that's not caused by a collision.
Comprehensive insurance is different from collision insurance, which covers damage to your car when you hit another car or object while driving. Drivers often carry collision insurance to protect against risks that comprehensive insurance doesn't cover, and vice versa. In fact, some insurance companies won't sell one type of coverage unless you also buy the other.
When you make a comprehensive insurance claim, you'll be responsible for paying your deductible, which may vary from a few hundred dollars up to $1,000 or more. The insurance company will then cover the rest of the cost of repairing or replacing your vehicle, up to the current value of your car. If you have a $500 deductible, for instance, and it costs $3,000 to repair the roof of your car after a tree branch dents it, you pay $500 toward the repairs, and the insurance company pays for the rest.
Although you should always check your specific policy for details, comprehensive insurance generally covers you in the following situations:
- Your car is damaged in a fire or explosion.
- Your car is stolen or is damaged during an attempted theft.
- Your car is damaged or lost in a natural disaster, such as a flood, tornado or hurricane.
- Your car is damaged by something falling or flying, such as hailstones or a telephone pole.
- Your car is vandalized or is damaged by civil disobedience, such as rioting.
- You hit an animal, such as a deer or cow. (This is the rare instance when comprehensive, rather than collision insurance, covers damage that occurs while driving.)
- Your windshield or windows are cracked or broken. Because glass damage is so common, some insurers sell expanded coverage for glass. For example, Farmers sells options for windshield and glass repair with a $100 or $0 deductible.
Comprehensive insurance has its limitations, however. Here are some situations where it won't protect you:
- Damage to your vehicle when you're driving: If a boulder falls on your car while it's parked in your driveway, comprehensive insurance will cover the damage. If you crash into that same boulder while driving, however, collision insurance takes over.
- Wear and tear or mechanical problems: Mechanical failures and normal wear and tear on your car aren't covered by comprehensive insurance.
- Items stolen from your vehicle: These may be covered by your homeowners or renters policies, but are not covered by comprehensive insurance.
- Liability or medical costs: Comprehensive insurance only covers your vehicle. If people are injured in the incident that damages your vehicle—for instance, you're sitting in your car when a telephone pole falls on it—comprehensive insurance won't pay for liability or medical costs.
How Much Does Comprehensive Car Insurance Cost?
States typically require drivers to have a certain level of liability insurance, which covers the cost if you cause damage to vehicles or injuries to other parties while driving. The cost of comprehensive coverage is added to the cost of liability coverage.
The cost of comprehensive insurance can vary widely. Nationwide, the average cost of comprehensive insurance is $159.72 annually, according to the Insurance Information Institute (III). However, in some states it's quite a bit lower ($96.15 in California, for example), while in others it's significantly higher ($291.22 in Wyoming). What factors influence how much collision insurance costs?
- The car you drive: Certain vehicles cost more to repair than others. Some cars are also more popular with car thieves. If your car is one of these, you may pay more for comprehensive insurance. Because the amount of comprehensive coverage you can get is based on the value of your vehicle, your car's value is also a factor. In general, more valuable cars have higher comprehensive insurance premiums; older, less valuable cars have lower premiums.
- Where you live: Different states regulate insurance carriers differently, causing premium variances from state to state. You'll also be considered a higher risk if you live in a high-crime area or one frequently hit by natural disasters.
- Where you park or store your car: Certain places are riskier than others. For example, a car parked on the street is more likely to be vandalized, stolen or hit by a tree branch than one that's locked in your garage—and you'll pay more for that added risk.
- The deductible you choose: A low deductible means you'll pay less out of pocket if you file a claim; however, it also means your premiums will be higher. Increasing your deductible can help to reduce your premiums.
- Previous insurance claims: If you have a history of prior insurance claims, insurers may consider you a higher risk and charge you more.
- Your personal demographics: In determining how risky you are to insure, insurance carriers will consider your gender, age and marital status. Some also look at your employment and whether you own or rent your home. Using this information, they can assess whether you are likely to file a claim.
- The insurance company you choose: Premiums differ from one insurance carrier to another. In addition, most insurers will give you discounts if you buy more than one policy from them, such as bundling home and auto insurance.
- Your credit score: In most states, auto insurance companies use a special version of your credit score known as a credit-based insurance score to more accurately measure your insurance risk and raise or lower your premium based on what they find. Improving your credit could help reduce your premiums.
Who Needs Comprehensive Car Insurance?
When you lease or finance a car, the lender may require you to get comprehensive (as well as collision) coverage to protect the vehicle. Otherwise, comprehensive insurance isn't legally required, and you can opt out of it. But should you?
Owners of older, less valuable cars often drop comprehensive insurance. The payout for a comprehensive claim will never exceed the car's value, so if your vehicle is only worth a few thousand dollars, comprehensive coverage may not be worth the expense. Rather than spend money to insure an old car, you might prefer to put that cash into a new-car fund instead. The III suggests dropping comprehensive and collision coverage if your car is worth less than 10 times the annual premium for the two coverages combined.
But even with an older car, there can be good reasons to get comprehensive car insurance. Here are some questions to ask yourself when making the decision:
- Do you live in an area with a high rate of car theft or other crime? If so, your car is at greater risk of being stolen or vandalized, especially if you often park it on the street or in an open carport.
- Do you live in an area with extreme weather? If your area is prone to hurricanes, tornadoes, wildfires or other extreme weather, comprehensive car insurance can give you one less thing to worry about in the event disaster strikes.
- Do you commonly encounter animals while driving? If you live in the mountains or the country and frequently come across deer, bears or cows on the road, comprehensive insurance can be well worth the cost. The average cost of an insurance claim for an animal strike is $3,875, according to the Highway Loss Data Institute.
- Do you have an expensive car? Paying to repair a high-end vehicle is costly; replacing one can cost tens of thousands of dollars. Comprehensive insurance could help reduce these costs.
- Can you afford to repair or replace your car in the event of a disaster? Your own finances are the biggest consideration in whether or not to get comprehensive insurance. Your car may only be valued at $3,000, but if coming up with $3,000 to replace it would be a stretch, comprehensive coverage is probably a smart investment.
Although comprehensive insurance isn't required by law, most drivers find it an affordable way to protect their bank accounts from the unexpected expense of repairing or replacing a vehicle. You can lower your comprehensive insurance premiums by raising your deductible, maintaining a good credit score and comparison shopping among insurance companies to find the best policy for you.