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What’s comprehensive car insurance? (comprehensive car insurance definition)

Any car accident is something which should not be taken lightly because the following could easily happen.

  • Loss of lives.
  • Loss of property eg car destroying nearby buildings and car wrecks.
  • Psychological stress like post-traumatic stress disorders, car phobia and others.
  • Expensive medical and body shop bills.
  • Bodily injuries lead to permanent disabilities.

If you are driving any car, you need to be careful well knowing that you could be a victim, and you should also have enough insurance coverage to protect you financially in case the unprepared happens. You never know the day, hour, minute and or the second. Buying comprehensive car coverage is one of the ways you can protect your property(car) from total losses.

This article covers the following:

Page Contents

What is comprehensive car insurance?

Comprehensive auto insurance, also known as ‘other than collision ‘ coverage helps to repair or replace your car from any damages/losses that do not arise from a car accident.

This coverage covers the following.

  • Vandalism
  • Fire
  • theft
  • Natural disasters and extreme weather like hailstorms.
  • Falling objects like your car being hit by a tree.
  • Collision with an animal like a deer (Only car collision is covered).

What comprehensive car insurance does not cover?

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You may or may not be at fault for the road traffic accident you were involved in.

Assume you are at fault, you may be sued by the other party and be required to:

  • Pay costs to repair the third-party car you damaged. 
  • Pay all medical bills for the people injured in the car crash.
  • Replace the car you crashed in case it is totalled. 
  • compensate lost income for the injured people.

Irrespective of whether you are at fault or not, you will need to:

  • Pay for costs to repair your car.
  • Replace your totaled car.
  • Pay for your medical bills in case you are injured.

If the only insurance coverage you had was comprehensive insurance, then you will need to cover those losses from your own pockets. This is much more than a disaster, right? If you agree with me, then you should look beyond comprehensive car insurance coverage.

In simple terms, comprehensive coverage does not cover the following;

  • Damage to someone’s else vehicle from collision.
  • Damages to your car.
  • You or your passengers’ medical expenses.

What is the difference between full coverage and comprehensive insurance?

You will rest assured well knowing you have full coverage if you purchased 3 coverages which are;

  • Liability coverage. This is the coverage that covers the car you crashed, and the property you damaged, and pays medical bills for the people injured in the other car.
  • Collision Coverage. If you are the causer of the accident, liability caters for the third party. You will have your car repaired or replaced with the help of collision coverage.
  • Comprehensive coverage. I already covered this in detail. Refer back to the last bullet in case you need more grasp. 

So as you can see guys, comprehensive forms part of the full auto insurance coverage just like collision and liability insurance coverages. Do you think everyone needs this full car insurance coverage? Continue reading.

Is comprehensive car insurance worth it?

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Yes, comprehensive car insurance coverage forms part of full insurance coverage. But is it worth it?

  • If you live in an area where natural disasters are common, then you should consider buying comprehensive car insurance. According to the United Nations Office for the Coordination of Humanitarian Affairs, Japan, China, Phillippines and Bangladesh are some of the countries known for severe natural disasters. In the USA, California is the most disaster-prone state. Other states in the USA known for disasters are Oklahoma, Florida, Washington, New York, Alabama and New Mexico. 
  • You may need this coverage if you live in places where there are many wild animals. For instance, 1 in 37 drivers in West Virginia has a risk of hitting a deer. This risk is 1 in 39 in Montana, 1 in 48 in Dakota, 1 in 54 drivers in Michigan, and close to 1 in 54 drivers in Pennsylvania. If you live in such areas, then comprehensive car insurance is a must for you.
  • comprehensive car insurance is not mandatory just like liability coverage. And just like collision coverage, it carries a deductible. If you had a loss and decided to claim against your comprehensive car coverage, there is a certain amount of money (chosen by you) you will pay out of your pocket before your company compensates you. This is called a deductible.
  • If you are driving an old car, or the cheapest car, you will discover that the premiums you are paying as car insurance are way higher than the actual cash value of your car. In case of a loss, compensation from comprehensive coverage is smaller than what you have been paying. I recommend you drop this insurance coverage.
  • If you lost your job or you are in any economic crisis, then you should consider temporarily dropping comprehensive coverage. Most states require you to buy liability coverage so no cop will pull you over and charge you if you do not carry comprehensive coverage.
  • If you do not pack your car in the garage. Assume you leave your car parked in open areas like public spaces, non-guarded open areas etc, Your car is at risk of vandalism and therefore you need comprehensive insurance coverage.

Comprehensive vs Collision insurance.

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If you are at fault for the accident, liability or a third party will compensate the other party on your behalf on the assumption you carry it. If you carry collision coverage, this policy will compensate you by either repairing your car or helping you get a replacement by paying you the actual cash value or fair market value of your car less the deductible. Collision coverage though forms part of full insurance coverage, it is not a requirement in many countries or states in the USA. You can choose to drop it off just like comprehensive coverage though I do not recommend it.

Comprehensive insurance deductible

A car insurance deductible is the portion of money you will pay against your claim before your insurance company pays the rest. Some policies like liability carry no deductible, while a couple of others do carry a deductible.

Before buying any insurance policy, we recommend asking questions to find out if your policy carries a deductible or not. Some policies that carry deductibles are;

  1. Comprehensive auto insurance coverage.
  2. Collision coverage.
  3. Underinsured / Uninsured motorist coverage.
  4. Personal injury protection coverages. 

What is the role of car insurance deductible?

  • You have the choice to choose the deductible well knowing you will pay that money first before the company covers the other losses against the insured accident/event.
  • A higher deductible implies less (cheaper) insurance premiums. Premium is the amount of money you pay periodically to the insurance company in exchange for protection.
  • You need to study your state laws. Some states state the maximum amount you must choose for personal injury protection while others are relaxed.
  • You must pay the deductible you chose every time you claim against the insured accident/event.
  • Your insurance company automatically deducts your chosen deductible from your payout. You do not need to pay that money to the insurance company. For example, if the total cost to repair your car is $5000 and you initially opted for $1000 as your deductible, the company will cut you a $4000 check expecting you to cover $1000.

Comprehensive car insurance cheapest.

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If you are living here in the USA, State Farm has one of the cheapest average full insurance coverage rates of $109 per month which directly translates to $1,310 per year. 

Just like any insurance coverage, the cost of your comprehensive coverage depends on;

  • Type, model, and make of the car you are insuring.
  • Previous accident/claim history. 
  • your location or geographical area.
  • Your credit score.
  • How prompt you have been paying your premiums.
  • Qualification for a couple of discounts.
  • Past driving history records.
  • Do you park your car in a garage or open public areas?
  • The deductible is chosen and many others.

You will need to shop around for at least 3 price quotations and choose the best price taking into account the customer care of the company and how smooth is the claim process. At the end of the day, you want a company where claim settlement is hassle-free.

Can I drive someone else's car if I'm fully comp?

This is a common question on this website. Assume you have a full comprehensive car coverage of your Car A. Your friend owns car B with full coverage too. Can the owner of car A driving car B and be protected by his (car A) insurance coverage?

The answer is no. To do that, you will need to ask your company to offer you ‘drive other car’ (DOC) clause in your coverage. This is a temporary clause and allows you to drive other cars. This clause is also physically stated on your certificate of motor insurance otherwise you run a risk of being pulled over and charged. 

If you are found driving someone’s else car with no DOC clause on your policy, you could be charged, and earn 6 to 8 points on your driver’s licence putting yourself at risk of being banned from driving. Driving someones else car also could make the renewal of your insurance coverage expensive so you should avoid it at any cost.

You would rather be added to that car insurance policy as a temporary or second driver to avoid penalties. For instance, you can decide to add your child who is always at school as a second or temporary driver on your policy.

Not all insurance companies offer the ‘Drive Other Car’ (DOC) clauses so you may need to do thorough research or contact your company for negotiations.

Should you have full coverage on a paid-off car?

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If you leased or you are financing your car (car loan) the dealership will force you to buy full coverage on the car. Full coverage includes; comprehensive, liability and collision policies. But do you still need to keep a comprehensive policy after you paid off your car loan?

The answer depends on the following;

  • How valuable (how expensive) is your car.
  • What is your budget or are you financially okay?
  • What is the general outlook of the car?

Comprehensive coverage is not mandatory and people opt to drop it to save money. If you are driving an old car, you will realize the market value of the car is less than the insurance premium you have been paying. Should you claim against the comprehensive policy, what you receive as the actual cash value (fair market value) will be meagre making it a loss.

If your car is old, or your budget is tight and if you can pay for repairs out of your pocket, the comprehensive coverage is not worth it. You can choose to drop it.  Earlier in this article, I listed areas with the highest risk of vandalism, natural disasters, areas where you are likely to hit a wild animal etc. If you come from such areas, be sure to keep your comprehensive policy unless your car is too old to fetch all the premiums you are paying.

Is comprehensive insurance full coverage?

No. Comprehensive is not full coverage. It forms part of the full motorist coverage. You will know you are fully insured if you purchased comprehensive, collision and liability policies.

You can also decide to buy full comprehensive or partial coverage. In partial comprehensive, you will handpick coverages. For instance, you could choose to drop vandalism or damage from hailstorms. Ask your company or your agent in case you need to buy a partial comprehensive policy.

Comprehensive car insurance for those under 25

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According to Money Geek, a 20-year-old will be charged on average $2,465 per year whereas an adult (25+ years) will pay $1,402 per year. This implies that insurance costs for teenagers and young drivers are generally high. In the same vein, comprehensive auto insurance for such age groups is always higher. 

I recommend you shop around and compare prices from different companies. I have heard that some companies are youth-friendly compared to others. If you are a new driver, your quotations will be high. Students can take advantage of good grades to negotiate for cheaper prices. 

When should I drop full coverage on my car?

Full coverage implies you have collision, liability and comprehensive coverages on your vehicle. Some states require a minimum insurance coverage before you drive your car. You can not drop liability coverage unless you come from the 2 states where car insurance is optional.

If leased or you are financing your car, no way you will drop full coverage. This is because the dealership wants to fully protect their car. You will also be asked to buy gap insurance making the total cost of insuring your leased/financed car higher.

You can drop full coverage if you paid off your car and if the cost of repairing or replacing the car is less than the insurance premium you are paying.

Comprehensive insurance vs third-party insurance.

For any car accident, you may be held the at-fault driver or not. If you are the cause of the accident, you will be financially responsible for the following;

  1. Repair the other car.
  2. Replace the other car.
  3. Pay for all medical bills for the people in the other car.
  4. Pay for all the property damage eg damaged nearby building. 

Third-party also known as liability car insurance will help you cover such costs. This policy is mandatory in many countries and across the USA such that you will be charged if found without it. I also recommend you buy extra coverage that is higher than the state’s minimum requirement.

How is comprehensive car insurance calculated?

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If you decide to claim against your comprehensive auto insurance, the company will calculate your final payout as follows. 

If your car is totaled, you receive the actual cash value. 

Actual cash value = fair market value – depreciation value.

Your final payout = Actual cash value – deductible.

If the company decides to repair your vehicle;

Final payout = total cost to repair the car – deductible. 

However, every company has its different formula by which your actual cash value or market value is computed. In case you do not agree with the final payout or any of their decisions, contact and ask them how they determined your payout.

Do Insurance companies cheat?

Just like any profit-oriented company, all insurance companies are there to make money. Their claim adjusters aim at maximizing profits so you need to take care. It is on record that the first settlement will be less than $500 and upwards because they want to leave room for further negotiations.

Do not always accept the first settlement unless you are the person who does not like fracas. You will get surprised when your second settlement or subsequent ones will be much better than the first suggested settlement.