If you own a car, you need car insurance. However, understanding the different types of coverage can be confusing. People often talk about comprehensive auto insurance. Many people think that with “comprehensive coverage,” you are always protected, but that is not the case. Comprehensive coverage is a combination of different types of financial protection. Your lender may require this when financing or leasing a car, but does this apply to everyone? In this article, we will explain what comprehensive auto insurance is, how it works, and whether you need it. You will learn what comprehensive coverage entails and what benefits it ultimately provides you.
Comprehensive Coverage Car Insurance
Comprehensive auto insurance is a combination of insurance policies that provide full protection. It usually covers liability, collision, and comprehensive. It covers more than basic liability insurance, but not everything. Comprehensive insurance covers damage to your vehicle from accidents, theft, vandalism, and natural disasters. It also ensures that you meet the state’s and lender’s requirements for vehicle financing. However, every policy is different, so check your coverage details to see what is covered.
What Does Comprehensive Auto Insurance Cover?
There are generally three types of coverage available with comprehensive auto insurance. First, liability insurance covers bodily injury and property damage caused by accidents. Most states require this. Second, collision insurance covers the repair or replacement of your vehicle after an accident, regardless of who is at fault. Comprehensive insurance not only covers collisions but also theft, fire, vandalism, and natural disasters. Some policies offer coverage for uninsured motor vehicles, medical expenses, and rental car reimbursement. The insurance company and the policy you choose determine the coverage and limits.
Liability Insurance Explained
In most states, auto insurance must include liability coverage. It covers injuries and property damage resulting from the accident. The main components are liability for property damage and personal injury. If you cause an accident and someone else is injured, bodily injury liability insurance covers medical bills, lost income, and legal expenses. Property damage liability insurance covers the repair or replacement of your vehicle and belongings. Liability insurance protects others, but it does not cover your vehicle or medical expenses. That’s why additional coverage is usually necessary.
Collision Insurance Explained
Comprehensive coverage includes collision coverage to repair your vehicle after an accident. Collision insurance covers the cost of repairs after a collision with a car, tree, or guardrail. Unlike liability insurance, collision insurance protects your vehicle regardless of who is at fault. Repairs are expensive, so this coverage is essential if you drive a newer or more expensive car. There is a deductible, which you must pay before the insurance company pays the rest. The higher the deductible, the lower the premium. However, you will pay more if you file a claim.
Explaining Comprehensive Coverage
Comprehensive or “other than collision” coverage covers damage that is not caused by a car accident. Examples include theft, vandalism, fire, hail, flooding, falling objects, and collisions with animals. Comprehensive coverage can help you cover the cost of repairing or replacing your car if it is stolen or damaged in a natural disaster. Like collision insurance, comprehensive coverage has a deductible that you can adjust to fit your budget and risk appetite. This is optional, but drivers who want financial protection in the event of an unforeseen event should opt for it.
Uninsured and Underinsured Motorist Coverage
Uninsured and underinsured motorist coverage is optional but a valuable addition to comprehensive coverage. This coverage can cover medical and vehicle repair costs if you are involved in an accident with an uninsured driver. Many drivers are uninsured or only have the minimum coverage required by law, which means your damages may not be covered. Uninsured motor vehicle insurance protects you if the other driver can’t pay for the damage. Some states require this insurance; others don’t.
Medical Payments and Personal Injury Protection (PIP)
MedPay and PIP cover medical expenses for you and your passengers after an accident. In states without no-fault insurance, MedPay covers hospital bills, surgery, and recovery costs. In states with no-fault coverage, PIP is mandatory. It covers loss of income and essential services such as child care if you are unable to work. Both types of insurance cover medical expenses, regardless of who caused the accident.
Roadside Assistance, Rental Car Reimbursement
Some of the added benefits of fully insured policies include rental car reimbursement and roadside assistance. You can rent a car while your car is being repaired after a covered claim. This is especially helpful if you drive to work. Roadside assistance includes towing, battery jump-starting, tire changes, and fuel delivery. These optional coverages can give you peace of mind in the event of an unexpected situation and reduce your out-of-pocket costs.
Do You Need Full Coverage Auto Insurance?
Whether you need comprehensive auto insurance depends on your specific situation. Lenders usually require it when financing or leasing a car. If you own your own car, the decision is yours. Newer or more expensive vehicles should be fully insured, as repairs and replacements can be expensive. If you drive an older, less expensive car, comprehensive coverage may not be worth it. Consider your financial situation, risk tolerance, and repair costs before deciding to keep or cancel comprehensive coverage.
How Much Does Full Coverage Auto Insurance Cost?
The cost of comprehensive auto insurance depends on age, driving history, location, type of vehicle, and deductible. Due to the higher level of protection, comprehensive insurance costs more than liability insurance. Higher deductibles, combined policies, a good driving record, and discounts can all help lower your premiums. By shopping around and comparing quotes from insurance companies, you can find the best deal.
Conclusion
Comprehensive auto insurance offers financial protection, but it is not for everyone. This includes liability insurance, collision insurance, comprehensive insurance, uninsured motor vehicle insurance, and rental car reimbursement. It’s great for newer or financed cars, but older, less valuable vehicles may not need it. Understanding your policy and needs can help you make an informed decision. If you’re not sure whether you can get full coverage, discuss your options with your insurance company to find the best balance between coverage and affordability.
FAQs
1. Is full coverage auto insurance required?
Most states require liability insurance but not comprehensive insurance. If you’re financing or leasing a car, your lender will likely require full coverage.
2. Can I cancel full coverage insurance after I’ve paid off my car?
Yes, you can cancel your full coverage once you’ve paid off your car. Before you make this decision, consider whether you can afford to repair or replace your car.
3. Is roadside assistance included in comprehensive insurance?
Roadside assistance is optional and is not included in the full coverage. Ask your insurance company if this service is offered.
4. What is the deductible for comprehensive insurance?
The deductible ranges from $250 to $1,000. A higher deductible will reduce your monthly premium but increase your claim costs.
5. Is a rental car covered by comprehensive insurance after an accident?
For a fee, the rental car fee can be added to the full coverage.
