How Does Comprehensive Car Insurance Work?

Comprehensive car insurance is one type of policy that protects you financially if your vehicle suffers damage. This type of coverage is not mandatory; whether it is suitable for you depends on your personal preferences and circumstances.

So, how does comprehensive insurance work and when do you need it? How is it different from collision insurance? What about full coverage? Can you buy it as a standalone policy? Insurance Business answers these questions and more in this guide.

How Does Comprehensive Car Insurance Work?

Comprehensive car insurance covers the cost of repairing or replacing your vehicle if it is lost or damaged as a result of an accident unrelated to traffic. This includes man-made incidents such as arson, theft, and vandalism, as well as natural disasters such as ice storms and typhoons.

This insurance does not pay claims if your car collides with other vehicles or objects. That is why it is often referred to as "collision addition" coverage."

Comprehensive insurance is not mandatory, although car dealers, banks, and other lenders require it if you finance or lease your vehicle.

If you own a car in full, the decision to take out this policy is entirely up to you.

Auto insurance companies often package comprehensive car insurance with collision coverage, but some companies give you the option of taking one of the two. However, both cannot be purchased as a standalone policy. You need to add it to your existing car insurance, which should cover all coverage required by the state.

Comprehensive insurance can also cover not only your car, but also other types of motor vehicles. These include boats, motorcycles, RVs, and yachts. Your policy will pay based on your vehicle's actual cash value (ACV). This is the market value of your car before the accident.

Just like many types of policies, comprehensive car insurance comes with deductibles. An insurance Deductible is the amount you have to pay to get coverage before your auto insurance company takes over. It's usually in $500 increments, so you can choose from $500, $1,000, $1,500, and so on.

For example, suppose you choose a $1,000 deductible, and your car is then crushed by a large tree branch causing $2,500 worth of damage. You will be responsible for the first $1,000 and your insurance company will cover the remaining $1,500.

What does Comprehensive Car Insurance Cover?

Comprehensive car insurance covers damage caused by unforeseen incidents unrelated to traffic. This means anything that is not the result of a vehicle collision. Such incidents:

Car theft

Unlawful acts such as riots

Damage caused by animals

Fire and explosion

Falling objects, including tree branches

Shattered glass

Natural disasters such as earthquakes and volcanic eruptions

Vandalism

Weather-related events, including ice storms, typhoons, floods, lightning, and tornadoes

If you're from Florida, you know how damaging weather-related events can be. Discover how auto insurance can protect you in this guide on car insurance in Florida.

What is excluded from Comprehensive coverage?

Although comprehensive car insurance provides coverage against a number of incidents, this does not include what is already covered by collision car insurance and other types of auto insurance policies. Some exceptions to comprehensive coverage are:

Damage to your vehicle as a result of a collision or pothole, which is covered by collision car insurance

Damage you cause to someone else's vehicle, which is covered by property damage liability insurance

Injury you cause to another person, covered by bodily injury liability coverage

Medical expenses you and your passengers incur as a result of an accident, which can be covered by personal injury protection coverage, also referred to as medical payment coverage in no-fault countries

Legal costs resulting from an accident, which are covered by your policy's liability coverage

Stolen goods from your vehicle, which may be covered by your homeowner's or renter's insurance policy

Comprehensive car insurance also does not cover damage caused by normal wear and tear.

If you avoid a collision with an animal and hit a fence, comprehensive insurance will not cover damage to your vehicle. Instead, it is covered by Your collision car insurance policy.

The table below summarizes what is and is not covered by the comprehensive auto policy.

What is the difference between Comprehensive coverage and collision coverage?

The main difference between comprehensive car insurance and collision coverage is what these two types of policies cover.

As the name suggests, car collision insurance pays for damage if you collide with another vehicle or object. It also covers damage caused by potholes or if your car rolls over.

Meanwhile, comprehensive insurance provides coverage for damage that is not related to traffic or that is not caused by a motor vehicle. That is why it is sometimes referred to as "collision addition" coverage."

Comprehensive coverage and collision coverage are often confused with each other due to their similarities. Both are optional. Both cover the cost of repairing or replacing a vehicle after an accident. Both also have deductibles that you must pay before coverage takes effect. Both pay the actual cash value of the vehicle. And both may be necessary if you finance and rent your car.

The table below summarizes the differences and similarities between these two types of car insurance policies.

Is Comprehensive Insurance Full Coverage?

Comprehensive car insurance is often mistaken for full coverage car insurance because of the term used.

Technically, however, full coverage car insurance is not an actual policy.

Instead, it's a combination of state - required coverage - which can include liability, medical payments, and uninsured/insufficiently insured driver coverage-plus comprehensive and collision insurance. Combined, these policies provide full protection to you and your vehicle, which is why they are called full coverage.

For more information on how these auto insurance plans work, check out our guide on full coverage auto insurance.

With a better understanding of comprehensive auto insurance, you can make smarter decisions about the type of coverage that works for you and your vehicle. Remember to always consult your insurance company for more details on the coverage they offer.

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