Car insurance is one of those expenses that offers very little gratification, until you need it. You pay it twice a year or maybe every month and it can feel like you're not getting anything in return for your money. And coverage can be complicated as well. You might not even understand exactly what it is you're paying for. Comprehensive car insurance is just one component of available car insurance coverage. If you ever have to make a claim, you'll probably be very glad you paid for it – but this might not be the case for every car and driver.
What Is Comprehensive Car Insurance?
Comprehensive car insurance covers events that are out of your control. You're typically not behind the wheel of your vehicle when catastrophe strikes, but you could be. You might be sitting at a red light when the wind blows a tree down and it lands on the roof of your car, caving it in. You couldn't control the wind and you couldn't control where the tree fell, so this is a comprehensive insurance claim.
This type of insurance also covers theft if someone steals your car – again, this is something that's considered out of your control. It covers fire, vandalism, damage caused by weather events and even damage caused by civil crises such as riots.
Comprehensive car insurance typically pays the fair market value of your car if it's destroyed or for the cost of repairs if the vehicle can be saved. In all likelihood, fair market value isn't going to be as much as you paid for the vehicle and claims are generally limited to the fair market value of your car. You can't elect $10,000 in comprehensive car insurance coverage on a $1,000 beater.
Claims are also usually subject to a deductible, too – you can choose how much when you sign up for coverage. If repairing your tree-dented roof costs $2,000 and you have a $500 deductible, your insurance will pay for $1,500 for the repairs. You'll have to pay out of pocket for the remaining balance.
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What Is the Difference Between Collision and Comprehensive Insurance?
Collision coverage is different because it assumes that you did have at least some control over your vehicle at the time calamity struck. It's pretty much just what it sounds like: You were involved in a collision.
This doesn't necessarily mean you're at fault for the accident. Someone might have plowed into your vehicle from behind when you were stopped at that red light. Unlike the fallen tree, this is covered by collision car insurance. The incident doesn't necessarily have to involve another vehicle, either. Maybe you hit a pothole that was large enough to tear out your vehicle's undercarriage. That falls under collision coverage, too. You were driving so, in theory at least, you might have avoided it.
What if You Hit a Deer?
Mishaps involving animals usually fall under the umbrella of comprehensive coverage as well. After all, you'd have no control over a deer that suddenly decides to bound into the roadway directly in front of your vehicle. Comprehensive car insurance also covers repairs if a raccoon or other animal – even your own dog – somehow manages to get inside your car and tear up the upholstery or do other damage.
But what if you saw the deer coming and spun the wheel to avoid hitting it? You might not have hit the deer, but you drove off the roadway and down an embankment. You had control in this instance. Now the claim falls under collision coverage.
Is Comprehensive Car Insurance Worth It?
If you own your vehicle outright, collision coverage is optional. State laws don't require that you carry it. If you don't and you suffer a loss, that's your problem. It won't affect the public good.
So should you buy this coverage? That depends on how much cash you have on hand and how much your car is worth. If your vehicle is totaled due to an event that's beyond your control, can you afford to replace it without too much of a financial pinch? If so, it might not be worth it to pay for this extra coverage. And it's much easier to replace a $3,000 car than it is to replace one that's worth $20,000. The Insurance Information Institute suggests figuring out how much comprehensive coverage will cost you per year and multiplying that number by 10. If the result is more than your car's fair market value, carrying comprehensive coverage might not be worth it.
You might also want to evaluate how likely it is that your vehicle might suffer this kind of damage. If you live in or near an area where the crime rate is significant, you might want to pay for this coverage. But if you live in a rural area, deer are more likely to run rampant in such locations and there are probably other marauding creatures out there as well.
You probably won't have a choice as to whether you carry comprehensive car insurance if your vehicle is financed. It most likely acts as collateral for the loan – the lender can send a tow truck to repossess it and sell it if you don't make the payments. Lenders typically require that you carry comprehensive coverage in this situation because they want to make sure their collateral is in good shape if they have to repossess it.