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What is comprehensive insurance
Comprehensive car insurance is a type of coverage that assists in paying for the replacement or repair of your vehicle if it's stolen or damaged in a non-collision incident. Often referred to as "other than collision" coverage, comprehensive insurance typically covers damages resulting from events like fire, vandalism, or falling objects (such as trees or hail). If you're financing or leasing your car, your lender may require you to have comprehensive coverage. However, if you own your vehicle outright, it's an optional addition to your car insurance policy.
When shopping for comprehensive auto insurance or reviewing your existing policy, it's important to consider whether comprehensive coverage is right for you. Understanding what comprehensive insurance protects against, how it differs from collision coverage, and how limits and deductibles apply can help you make an informed decision.
Comprehensive vs. Collision Insurance: Know the Difference
While comprehensive and collision coverage are not legally mandatory, they can be highly beneficial for numerous drivers.
Collision and comprehensive coverage are frequently bundled together and provide coverage for repairing or replacing your own vehicle if it's damaged, but they do not extend to injuries or property damage to others.
What's the difference between comprehensive and collision coverage?
Collision coverage reimburses for damage to your vehicle resulting from a collision, whereas comprehensive coverage takes care of damage inflicted by non-collision events such as storms, animal encounters, or vandalism.
Comprehensive and collision insurance are two crucial types of car insurance that every driver should understand. Although they are not mandated by law in any state, they can cover damage to your vehicle in multiple scenarios.
The primary distinction between comprehensive and collision insurance lies in the situations they cover. Collision insurance reimburses for damage to your car if it collides with another object or vehicle. On the other hand, comprehensive insurance covers theft or damage caused by factors such as severe weather, fire, or falling trees. Some insurance providers insist on selling collision and comprehensive insurance as a package, while others may permit you to purchase them separately.
Coverage Type: Collision
Covers: Collision with another car, an object (e.g., building, fence, guardrail), and single-car accidents
Required by State Law: No
Required by Lender/Leasing Agent: Potentially, yes
Cost: Typically higher
Deductible: Yes; typically higher amounts offered
Coverage Type: Comprehensive
Covers: Damage caused by animals, falling objects, fire, natural disasters, vandalism, and theft
Required by State Law: No
Required by Lender/Leasing Agent: Potentially, yes
Cost: Typically lower
Deductible: Yes; typically lower amounts offered
Collision insurance covers:
Damage to your vehicle in an accident that you are responsible for.
Damage to your vehicle if you collide with an object, like a fence or pole.
Damage to your vehicle if another driver hits you, although in this situation, you also have the option to file a claim against the other driver's liability insurance.
Comprehensive insurance covers:
The actual cash value of your car if it's stolen and not recovered.
Damage caused by weather phenomena such as tornadoes, hail, and floods.
Damage from fire and falling objects.
Damage resulting from explosions.
Collisions with animals, like deer.
Damage from riots and civil disturbances.
Vandalism-related damage.
For example, if you accidentally hit a deer while driving, then the comprehensive insurance will cover the related losses. However, if you swerved to avoid the deer and ended up hitting a tree, then the comprehensive insurance would not apply in this situation, as this type of accident is classified as a collision with an object.
Non collision Comprehensive Auto Insurance
Comprehensive auto insurance provides coverage for repairing damages and losses that are not the result of collisions, regardless of fault. This type of coverage can help you cover the cost of damages caused by various factors, including:
Civil disturbances like riots
Falling objects
Fire
Floods
Hailstorms
Hurricanes
Tornadoes
Vandalism
Windstorms
Additionally, comprehensive insurance covers the cost of repairing damage to your windshield and other car glass.
Collision and Comprehensive Coverage,Rental Car Coverage
Coverage:
If your car is damaged in a collision with another car or object on the road and you are at fault, only your collision coverage will help pay for the repairs. Conversely, comprehensive coverage covers losses caused by factors such as animal contact, civil disturbances, fires, natural disasters, theft, and vandalism.
Rental Car Coverage:
Your personal collision and comprehensive coverages may include coverage for rental car damages while you are on vacation. However, it's important to check with your car insurance agent for details and to ensure that this coverage extends to rentals. Keep in mind that:
You will still need to pay the deductible.
Any claims you make may result in an increase in your premium.
Not all expenses may be covered, such as loss of income for the rental agency.
Some insurers may not provide physical damage coverage for certain types of cars that are difficult to insure, due to high theft rates or high repair and replacement costs.
Alternatively, you may need to have a high deductible of $1,000 or more for certain types of coverage.
What is a comprehensive deductible?
A comprehensive deductible is the amount you've agreed to pay out of your own pocket before your insurance company starts covering the damages. Think of it as the financial risk you're willing to take on in case of an accident. In general, the more risk you're prepared to assume (a higher deductible), the lower your insurance premiums will be. Conversely, the less risk you're willing to take (a lower deductible), the higher your insurance costs will be.
Imagine a situation where a severe hailstorm hits your area, causing 1,000 worth of damage to your vehicle.If you have a 100 deductible on your comprehensive insurance, you'll need to pay the first 100,and then your insurance company will cover there maining 900 of the repair bill. If you own an older car, you may want to consider whether comprehensive coverage is worth it, since it usually only covers up to the actual cash value of your vehicle.
Is Collision or Comprehensive Car Insurance Better?
If you finance or lease a car, you will be required to carry both collision and comprehensive coverage until the loan or lease is paid off. However, if you own your vehicle outright, you may not need either type of coverage. It's important to consider how much you can afford to spend out of pocket if your car is totaled, stolen, or damaged by a natural disaster.
If you have an older car with a low market value, it may not make financial sense to carry collision or comprehensive coverage. For example, if you just paid off your car loan and your vehicle still has a market value of $15,000, it may be financially beneficial to continue carrying both types of coverage, depending on the cost of your insurance premium. On the other hand, if your vehicle's market value is less than $3,000, you can likely drop both coverages.
Do I need comprehensive and collision insurance?
You should consider purchasing comprehensive and collision insurance in the following situations:
If you lease your vehicle or have taken out a loan to buy it, your lender or leasing company may require you to have collision and comprehensive coverage.
If you cannot afford to replace or significantly repair your car in the event of an accident or theft.
If your area experiences a high rate of car theft, vandalism, severe weather (such as hail), or animal collisions. Notably, according to the Insurance Information Institute, which analyzed 2021 data from the National Association of Insurance Commissioners, about 80% of all U.S. drivers purchase comprehensive coverage, and 76% purchase collision coverage.
Conversely, you may not need comprehensive and collision insurance if your car is older and has a low value. The maximum payout you receive from a comprehensive or collision claim will be the current market value of your car, minus the deductible. Therefore, if your car's value is low, weigh whether the potential payout justifies the increased premiums for the additional coverage. Additionally, remember that the deductible amount will be deducted from any claims payment.
How much comprehensive and collision coverage cost
Adding comprehensive and collision coverage to your car insurance policy will result in an increase in your premium. This is because you are upgrading your coverage to include protection for damage to your own vehicle, beyond just covering others' injuries or property damage.
To provide realistic comparisons, we analyzed November 2024 rates for policies with minimum coverage and policies that included comprehensive, collision, and higher liability limits. Together, these three types of coverage are typically referred to as "full coverage" car insurance.
Below are the median monthly rates for a 35-year-old driver with good credit and no recent traffic violations or accidents.
| Type of Policy | Median Monthly Rate |
|---|---|
| Full Coverage (with Comprehensive and Collision) | $180 |
| Minimum Coverage (without Comprehensive or Collision) | $50 |
Median rates for both full and minimum coverage insurance can significantly differ based on various factors such as personal characteristics and the state of residence. For personalized rates based on different driver profiles, ages, locations, and more, please refer to our analysis of average car insurance costs.
Collision Deductibles Explained
A deductible is the amount you are responsible for paying towards repairs before your insurance company covers any remaining costs (up to the actual cash value of your car). When purchasing collision coverage, you have the option to choose your deductible. Common options include 200,500, $1,000, or even higher amounts.
Opting for a higher deductible can result in a lower overall insurance premium. However, it means you will need to pay more out of your own pocket in the event of an accident.
How to save on comprehensive and collision insurance
Average annual car insurance rates can fluctuate by hundreds of dollars, which makes it crucial to obtain quotes from multiple companies to ensure you're securing the best possible deal.
Another strategy to reduce your costs is by increasing your comprehensive and collision deductibles. An insurance deductible is a fixed amount that gets deducted from a claim payout. Various policies provide options as high as $2,000. However, this should only be done if you're financially prepared to contribute more of your own money towards repairing or replacing your vehicle.
How to set your deductible?
The deductible for your comprehensive insurance coverage is determined by how much you're willing to contribute towards the premium for this coverage. A lower deductible will result in a higher premium, while a higher deductible will lead to a lower one.
While increasing both your collision and comprehensive deductibles can help reduce your insurance premiums, it's worth noting that comprehensive insurance generally costs much less than collision insurance. Therefore, simply raising the comprehensive deductible might not significantly lower your overall premiums.
Comprehensive deductibles commonly fall within the range of $100 to $1,000, with the average driver opting for a $500 deductible.
Is comprehensive insurance coverage mandatory?
Comprehensive coverage serves as an optional extra for your car insurance policy. No state mandates its purchase, as it solely provides protection for your vehicle. However, if you do not fully own your car, your lender will most likely insist on full coverage, which encompasses comprehensive and collision coverages alongside the liability insurance required by your state.
Should you choose not to purchase collision and comprehensive coverages, your lender will procure policies on your behalf – typically very costly ones – to safeguard the value of its collateral. These expenses will then be added to your loan balance.
When to drop comprehensive coverage?
Deciding whether to drop comprehensive coverage often becomes a challenging question as your car ages and its Blue Book value declines. If you're driving an older vehicle, you might find yourself pondering whether maintaining comprehensive coverage is still worthwhile.
As a general guideline, if the sum of your annual premium and deductible exceeds 10 percent of the cost to replace your car, it might be prudent to consider dropping both collision and comprehensive coverage. However, this should not be done if you rely on your car and have limited financial resources. A practical approach is to maintain comprehensive coverage if you cannot comfortably afford to replace your vehicle out of pocket.
Regardless of your decision, it's always beneficial to periodically assess your insurance needs and ask yourself, "How much car insurance do I really require?"
Can you solely have comprehensive insurance? The answer is not straightforward. While you have the option to purchase comprehensive insurance without collision coverage if you own your car, this might be a viable choice if you're confident you won't cause an accident but are concerned about potential theft. However, liability insurance is mandatory in nearly every state, with only a few rare exceptions.
What if my car is totaled
Unfortunately, it is not uncommon for vehicles to be deemed a total loss even outside the context of traffic accidents. Being totaled implies that the insurance company has assessed that the cost of repairing the vehicle exceeds its value at the time of the incident.
In cases where your car is totaled due to non-collision damages, such as a flood, animal collision, hurricane, or any other covered peril, your comprehensive coverage will compensate you for the vehicle's value at the time of the loss, minus your deductible. This reimbursement amount is somewhat negotiable and may include taxes and licensing fees that you have already incurred.
Frequently asked questions
Is comprehensive auto insurance worth it?
When considering comprehensive auto insurance, or any type of insurance for that matter, the first step is to thoroughly read the policy's fine print. Some insurance policies exclude coverage for specific types of damage, such as harm to GPS navigation or satellite radio systems that are not permanently installed in the vehicle. Other policies may impose limitations on the amount of coverage for such items, as noted by the Maine Bureau of Insurance.
A driver should also take into account the potential exposure of their car to hazardous conditions. For instance, a car parked on a bustling city street may be more prone to damage or theft compared to one that is securely parked in a garage. Consequently, such vehicles may be subject to higher comprehensive insurance rates, according to Cadet.
Ultimately, the value of the car is the paramount factor in determining whether comprehensive coverage is a wise investment. In the event of damage to a covered car, the maximum payout from comprehensive coverage is the cash value of the car at the time of damage, minus the deductible amount. For vehicles with low value, perhaps due to age or extensive wear and tear, the payout may be equal to or less than the cost of the insurance. For example, if a car worth $1,000 is damaged by a cougar escaping from a local zoo (or more realistically, stolen or damaged by a falling tree branch), and the owner has comprehensive insurance with a $500 deductible, the maximum payout would be $500. Given that comprehensive rates average around $113 per year, a driver who has paid for the coverage for four or five years may receive a payout close to what they have already paid in premiums.
A common guideline is that the annual cost of comprehensive auto coverage should be less than 10 percent of the vehicle's cash value, as suggested by Consumer Reports. In essence, the purpose of comprehensive auto insurance is to safeguard the value of the car from non-accident-related damage. If the car's value is already low, it may not be worthwhile to purchase this type of coverage.
Do You Need Both Comprehensive and Collision Auto Insurance?
Car leasing companies and lenders typically require lessors and borrowers to carry both collision and comprehensive coverage. However, if you own your vehicle outright, you may consider discontinuing one or both types of coverage. Remember that if you drop collision and comprehensive coverages, you will need to use your own funds to pay for losses.
Generally, it makes good financial sense to drop both coverages when your car's market value dips below about $3,000. However, it's important to weigh the potential risks and benefits of dropping coverage based on your individual situation.
Does Comprehensive Mean Full Coverage?
No. Lenders and auto leasing companies typically require customers to buy a full-coverage car insurance policy, but "full coverage" is not an actual policy type. It typically refers to an auto insurance policy that includes all legally required coverages, like bodily injury and property damage liability, plus collision and comprehensive coverages.
What Is Third-Party Insurance?
You file a third-party insurance claim when you believe the accident was the other driver's fault, and you file a claim with their insurance company. If the insurance company agrees and pays your claim, you will not have to pay a deductible for any car repairs. If you first file a claim with your company under collision coverage and pay the deductible, your company may be able to refund the deductible to you later.
Is It Better to Have a High or a Low Deductible?
Choosing a high deductible can lower your insurance premium, but it requires you to pay more out of pocket if you need to file a claim. Car owners who can afford to pay for losses using their own funds may choose a high deductible. Sometimes, your insurer may require a higher deductible if you have an excessive claim history.
On the other hand, a low deductible can help you avoid high out-of-pocket costs following an accident but will require you to pay a higher premium. Drivers with limited savings may benefit from paying a higher premium, with the assurance that their policy will cover higher losses.
Does comprehensive car insurance cover all drivers?
You're covered when anyone drives your car with your permission. You only need to list the main driver.
How much is comprehensive car insurance in the Philippines?
The usual range for comprehensive insurance for cars between ₱750,000 and ₱2m is usually between ₱15,000 - ₱50,000 per year, depending on the car make and model and the type of comprehensive insurance policy and ad-ons that you opt for.
Am I covered to drive another car on fully comprehensive?
No, having comprehensive insurance does not automatically allow you to drive any car. You need to check your policy details, as some policies may include a “Driving Other Cars (DOC)” clause, but many do not.
Does comprehensive insurance cover learner drivers?
This can vary from policy to policy so check before you buy. Fully comprehensive insurance on a standard car policy doesn't usually cover learners. You might need a separate insurance for learner drivers.
Is comprehensive insurance “full coverage”?
Technically speaking, there isn't a specific term known as "full coverage" car insurance. However, it is commonly used to describe a policy that includes liability insurance, as well as comprehensive and collision coverage. The concept behind this terminology is that such a policy offers more comprehensive protection – it safeguards you in case you cause damage to someone's property or injure them, and it also covers your vehicle against a wide range of potential incidents.
Comprehensive and collision coverage covers of the insured vehicle state
Collision and comprehensive car insurance can cover the same vehicle, but in different ways. Collision insurance covers damage done to your car when you have a collision with another car or an object like a fence. Comprehensive insurance covers damage caused by events such as natural disasters, fires, or theft.
When to drop collision insurance?
Check the price of your current premium and compare it to the current market value of your car. If your car's annual premium is more than 10% of your car's current value, you should consider dropping your collision coverage.
The Bottom Line
Collision and comprehensive auto insurance coverages provide valuable protections. If you drive an expensive vehicle, consider carrying both types of coverage to protect your assets in the event of a major loss. However, not all drivers need collision or comprehensive coverage. If you've paid off your car loan and your automobile has little market value, carrying these protections may not be cost-effective.
Additionally, consider your risk level. You might not need collision and comprehensive auto insurance if you own your vehicle and only drive it occasionally. However, if you live in a location with high auto theft or traffic accident rates, the extra protection might be valuable in the long run.