Covering Many Bases With Comprehensive Insurance
Not all damage to a car comes from collisions or driver error. The forces of nature or human acts other than driving can necessitate repairs or replacement of your vehicle. Covering these kinds of losses is the objective of comprehensive automobile coverage.
What is Comprehensive Coverage?
Damage to your car for a reason other than contact with another vehicle, utility pole, building or other object triggers comprehensive coverage. Incidents under the comprehensive umbrella include hail, hurricanes, tornadoes, falling objects such as ice and trees or their limbs; fire caused by something other than a collision, and earthquakes. You also make claims for theft, vandalism and riots under the comprehensive provisions of your vehicle policy.
In literal terms, contact with an animal constitutes a collision. However, the auto insurance world categorizes impacts with animals as comprehensive rather than collision incidents. These events may include a deer running into the front or side of the car or birds flying into windshields.
You can expect comprehensive coverage to pay for repairs of damage. This may include replacing windshields, removing dents or scratches, and painting. During the repairs, your insurer will pay your rental charges up to a particular rate and for a particular number of days.
If your vehicle becomes a total loss, your comprehensive insurance pays its value at the time of the incident. Services such as the National Auto Dealers Association (NADA) and Kelley Blue Book provide values based on model year, mileage, features and the vehicle’s condition. Your benefits under comprehensive insurance do not consist of what it would cost to buy the same vehicle or a newer version of it. Your vehicle has depreciated over time even before the event that triggers comprehensive coverage. If insurance companies paid replacement costs rather than reimburse you for the lost value, you would end up with a windfall.
Do I Really Need It?
States with fault-based tort regimes require that you have liability insurance. In no-fault vehicle accident jurisdictions, you must carry insurance that pays your personal injuries such as medical bills, pain, suffering and lost wages.
State laws do not require you to have comprehensive car insurance. However, a bank, car finance company or leasing company may require it as a part of the loan or lease agreement. This allows the finance company to preserve the collateral or recoup the balance owed (or part of it).
If your lender or leasing company doesn’t require it, whether you carry comprehensive insurance is a financial question. Your answer should take into account the age, value and condition of your car and the deductible. For lower value cars, you’re likely to have a minimal payout once the deductible is applied. With older cars, chances are that you have paid for mechanical repairs and more frequent maintenance. Ultimately, you might find your outlays for the vehicle greater than the ultimate value. As such, comprehensive coverage may not prove worthwhile.
Consider also your financial ability to repair or replace the vehicle. With poor credit scores or credit history, you might have trouble finding a car loan with advantageous terms. Your budget might not be able to handle a significant car payment. As a result, comprehensive car insurance can soften the financial burden of buying a new vehicle.
Making Comprehensive Claims
According to a report, one major auto insurer’s customers submit on average comprehensive claims of $1,400 per incident. Depending on the deductible, the actual benefits may run less than $1,000 from an incident. Often, windshield cracks or dings in the body from a rock may involve a few hundred dollars in repairs. By contrast, collision claims average $3,300 per incident. Further, unlike many collision claims, incidents that generate comprehensive claims normally involve no fault of the driver.
Accordingly, a comprehensive claim normally should not cause your premiums to rise or your comprehensive insurance to be cancelled. In fact, some states prohibit insurers from increasing rates for no-fault accidents. In the absence of these laws, it likely will take multiple comprehensive claims to affect your rates or coverage negatively.
At Velox Insurance, we can discuss your need for and the benefits of comprehensive insurance coverage. Our consultation will take into account the type, age and condition of your vehicle and the risks of events that may cause you to need comprehensive coverage.