What Does It Mean to Have Complete Auto Insurance?

What Does It Mean to Have Complete Auto Insurance?

Definition

When you buy full coverage car insurance, you are protected from financial loss even if you don’t get into an accident.

 The Meaning of Comprehensive Auto Insurance, Along with Some Examples

If you have comprehensive car insurance, also known as “other than collision” coverage, your insurer will pay to repair your vehicle if it is damaged in an accident that was not the result of driving or even occurring on the road. This includes damage caused by natural disasters, theft, vandalism, and other perils. 

For instance, they could include animals, objects falling from the sky, fire, vandalism, or even weather-related occurrences. If your car is stolen, the comprehensive insurance policy will also help pay for its replacement financially.

 Here are some more terms that are sometimes used to refer to complete coverage:

  • Comp
  • Aside from what involves collision,
  • Insurance for Stockpiling
  • Burglary and Shoplifting

What Kinds of Things Are Covered by Comprehensive Insurance?

Only losses that are not normally caused by a routine collision with another vehicle or an object, such as a fence or telephone pole, are covered by comprehensive car insurance. 

Damages caused by dangers “other than collision” may seem to be covered by comprehensive insurance, but there are limitations to this type of coverage. They are limited to the following categories of danger:

  • animal encounter, such as colliding with a deer or another animal.
  • Windows or windshields that are broken, chipped or otherwise damaged.
  • Natural disasters such as earthquakes, floods, hail, hurricanes, and tornadoes can occur.
  • Several explosions, as well as fires and smoke
  • Objects that are falling, such as a branch from a tree,
  • Theft of automobiles, the stealing of parts, or damage to vehicles caused by break-ins all fall under this category.
  • Vandalism, such as someone throwing eggs at your car or keying it

Different insurers offer a variety of comprehensive policy options. Towing and reimbursement for rental cars are two examples of optional extras that may be offered by some insurance companies as part of their comprehensive policies. It’s possible that some will only cover these costs for you if you pay for their additional options.

The comprehensive insurance policy may also pay to fix or replace a window or windshield that has been broken. Because the deductible on your insurance coverage applies to glass repair costs, you will initially be responsible for paying a portion of the bill yourself. However, some insurance companies provide customers with the choice of “full glass coverage,” and others provide customers with the choice of “full glass coverage with no deductible.” 

What Coverages Are Not Included in Comprehensive Insurance?

Comprehensive insurance does not cover collision damage. This holds true regardless of whether you crash with another vehicle or with a stationary object like a building, fence, or utility pole. You will require collision insurance to cover the costs associated with damage of this nature. 

Comprehensive insurance doesn’t cover damage from hitting a pothole or the normal wear and tear that happens to a car’s belts, brakes, hoses, tires, and windshield wipers.

In most cases, personal belongings that are taken from a vehicle and later found missing are not covered by comprehensive auto insurance. Despite this, there are other insurance policies that might cover it. Check with your homeowner’s or renter’s insurance to see if there are any stipulations covering items that have been stolen.

How Does the All-Inclusive Auto Insurance Policy Operate?

Let’s imagine you come out of your house after a night of strong winds to discover that a limb from a nearby tree has landed on the top of your automobile and caused a significant dent. 

You can file a claim with your comprehensive insurance because it covers this kind of damage, and then you can wait for the refund. Here are some of the most important things that will affect both the process and the end result.

Deductibles

A deductible typically applies to comprehensive auto insurance policies. Keeping your premium at a manageable cost can be accomplished by selecting a large deductible. However, this reduces the amount of money that will be paid out to you in the event that you make a claim. 

For example, if you have a deductible of $1,000 and your vehicle experiences $1,500 in damage as a result of a storm, you will be responsible for paying $1,000 toward the cost of repairs, while the insurance company will only pay $500 on your behalf.

The deductible that applies to your comprehensive policy may or may not be the same as the deductible that applies to your collision coverage. You might, for instance, decide that you want a collision deductible of $2,000 but a comprehensive deductible of only $500.

You have the option of selecting your deductible according to how much money you have available to pay for out-of-pocket costs. If you can afford to pay for minor repairs such as a chipped windshield, opting for comprehensive coverage with a deductible of $1,000 or more might be the best choice for you. 

However, if someone were to take your vehicle, the payout from the insurance company might not be enough to replace it. You should give careful consideration to the deductible you select because it will be applied to each and every claim you submit.

Payout in Actual Cash Value

The real cash value of your vehicle is what your comprehensive insurance policy will pay you if it is stolen or completely destroyed by a risk that is covered by the policy, such as a flood. Please be aware that this is not the price that you paid for the car. 

The actual cash value is a method for arriving at a number that is closer to the current market value, which can be thought of as the amount of money that someone may pay to acquire your car at the time of the event.

Under the actual cash value method, the age, condition, make and model and mileage of your car are used to figure in depreciation.

The rate at which cars lose value over their first five years varies greatly, with the average loss being 49.1 percent. The first five years of ownership of a Jeep Wrangler will see a depreciation of around 32.8 percent, while the first five years of ownership of a Lincoln MKZ will see a depreciation of 67.1 percent.

The actual cash value of your vehicle and the deductible on your insurance policy both play a role in determining the amount of compensation you will receive in the event that it is stolen or completely destroyed. 

For instance, if your 2018 Chevrolet Malibu, which is worth $10,322, was stolen and you had a deductible of $500, the most that your insurance company would pay out is $9,822 in compensation. On the other hand, if you have a deductible of $1,000, the most that you might collect is $9,322.

Gap Insurance

As a result of the substantial and rapid depreciation that takes place in the first five years of a car’s life, you should strongly consider purchasing gap insurance if you have just purchased or leased your vehicle. 

Many auto dealers or lenders require it. If your financed car is stolen or totaled within the first couple of years of ownership, the insurance payment most likely will not provide sufficient funds to pay off your auto loan.

If you purchase gap insurance, however, the policy will pay the difference between the two amounts. Take, for instance, the purchase of a brand-new 2021 Toyota Highlander 4WD at the price of $34,412. 

In the event that it is stolen in the first year, the insurance company will most likely offer a settlement of roughly $32,086. In the event that you do not have gap insurance, you will be responsible for the remaining auto payment balance of $2,326. If you do, though, the coverage will kick in to make up for the difference.

Gap insurance is advisable if you:

  • Finance a vehicle for a period of at least five years.
  • Rent a motor vehicle.
  • Make a down payment of less than 20% of the total purchase price.
  • Invest in a vehicle with a rapid rate of depreciation.
  • Transfer the difference between what you owe and what your old car is worth to the loan for your new car.

There are consumer advocates who caution that gap coverage may be costly in relation to the risk that it insures, or it may even be an unneeded up-sell from car dealerships. Before you buy any additional coverage, you should investigate your options and shop around. 6

How much does it cost to have comprehensive coverage?

Comprehensive car insurance can often be rather affordable for most drivers. The total cost varies depending on the type of vehicle and the driver, with premiums adding an additional $134 per year. 

Even replacing a cracked windshield can cost hundreds of dollars if you do not have coverage for the expense, and cracked windshields are quite common. Depending on the nature of the damage to your vehicle, purchasing a more comprehensive insurance policy could save you hundreds, or even thousands, of dollars.

Should I Get All-Inclusive Coverage Instead?

You don’t have to have full coverage on your car insurance because the state doesn’t require it.

However, the majority of leasing businesses and lending institutions will insist that you purchase coverage for any financed or leased car. Once you’ve paid your final payment on your auto loan, though, the lender won’t have much to say to you, and it will be up to you to decide what to do next. 

However, in order to make a decision, you should consider your particular circumstances. If you are able to purchase all-inclusive protection, then it is still something you should consider doing. 

Consider, too, if you have the financial means to replace your vehicle in the event that it is wrecked or stolen due to an event that is covered by your policy. Comprehensive insurance can be wonderful financial protection for you if you don’t have the funds to buy a new car or even put a down payment on one. 

Consider the part that your car plays in your life right now as the next step in this line of thought. Do you ride it to get to and from work each day? If you were to lose it, how much would it cost to make other transportation arrangements? As you can see, a variety of individual considerations may also play a role in your decision.

One Method That Can Assist You in Making Your Decision

When thinking about purchasing comprehensive insurance, the first step is to determine how much your vehicle is now worth. Consumer websites such as Kelley Blue Book can provide a value for your vehicle by taking into account its age, condition, location, mileage, and model in addition to its make and model. 

Purchasing comprehensive insurance can make sense if the value of your vehicle is at least two thousand dollars. However, once its value drops below $1,000, you may no longer require it, particularly when you consider the expense that you would pay anyhow to satisfy the deductible requirements.

Comparison of Collision Insurance and Comprehensive Insurance

Having more than one kind of insurance that applies to their vehicle is a source of confusion for a lot of people. The fact that collision and comprehensive coverage do not combine in any way is a crucial point to keep in mind concerning these policies. 

Your collision insurance will pay to repair or replace your vehicle if it is damaged or completely destroyed as a result of a collision with another vehicle or object. The comprehensive coverage pays for losses that were not caused by an accident and were brought on by a predetermined group of dangers. 

It is not usually possible to add collision coverage to an auto policy that does not already include comprehensive coverage. However, in most cases, you can just add comprehensive coverage to your policy without also purchasing collision coverage. Check with your insurance provider to see what kind of coverage they will cover.

Scenario: Collision Coverage

Coverage That Extends Far and Wide

  • Animal contact (whether with wild or domestic animals)
  • An accident involving another car or an object (such as a house, fence, or pole)
  • Damage caused by an earthquake, flood, hailstorm, or hurricane.
  • Damage caused by an explosion or a fire
  • Accidental injuries caused by falling objects
  • Damage incurred as a result of hitting a pothole
  • Stolen parts
  • Stolen vehicle
  • Vandalism

Key Takeaways

Theft and damage to a vehicle that is not the result of an accident, such as damage caused by vandalism or flooding, are both covered by comprehensive auto insurance.

If you lease or loan a vehicle, the leasing company or lender will demand you have comprehensive coverage even though state laws do not mandate it.

Your comprehensive insurance pays to replace damaged windshields after deducting your deductible from the total cost of the repair or replacement. However, some “full glass coverage” choices have no deductible at all.

The real monetary value of the vehicle is paid out under comprehensive coverage in the event that it is stolen or completely destroyed.

If your car is totaled and you still owe money on it, gap insurance might pay the rest of what you owe to the lender, even if your main auto insurance policy already paid that amount.

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