What is fully comprehensive car insurance?

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Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in...

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Chris Harrigan has an economy degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise...

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Reviewed byChris Harrigan
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UPDATED: Jan 24, 2018

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Here's what you need to know...
  • Insurance companies encourage every policyholder to carry sufficient insurance to pay for loss to personal property as well
  • Cheap insurance will not provide adequate coverage in the event of a significant loss
  • Liability covers losses incurred by third parties, including public property

Automobile insurance shoppers must determine the actual insurance need prior to seeking the most competitive insurance rates. Cheap insurance will not provide adequate coverage in the event of a significant loss.

For those with an outstanding loan on the vehicle, the lender can require the policyholder to carry fully comprehensive car insurance.

Auto insurance policies are made up of multiple components that determine what types of events are covered. Fully comprehensive car insurance provides adequate coverage for all types of vehicle damage that occurs in various events and circumstances.

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Adequate Coverage Limits

Auto insurance is designed to mitigate the risk of loss for anyone who operates a motor vehicle. States require every driver to carry sufficient liability insurance to pay for damage incurred by third parties.

Insurance companies encourage every policyholder to carry sufficient insurance to pay for loss to personal property as well.

Expensive vehicles can incur damage from any number of events that would cause the driver to pay to repair or replace the car if the insurance policy is not adequate.

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Major Types of Car Insurance Coverage

Three major components comprise most standard insurance policies:

  • Liability
  • Collision
  • Comprehensive

Liability covers losses incurred by third parties, including public property.

We have more detailed information on liability car insurance and how it works. Collision pays for damages that occur when the vehicle collides with other vehicles or stationary objects.

Comprehensive auto insurance covers damage that falls into all other categories.

What Comprehensive Covers

The following are some things comprehensive car insurance covers:

  • Policyholder’s car — Damage caused by unforeseen events to the vehicle listed on the policy will be paid to the policyholder from the comprehensive component of the auto insurance policy
  • Theft — In high crime areas, the comprehensive component will be more expensive because of the actual statistics used to calculate the frequency of auto thefts. Some insurance companies will refuse to underwrite comprehensive insurance policies in some areas
  • Vandalism — Cars that are vandalized through various methods are covered under the comprehensive component. The policyholder must determine if the damage incurred is significant enough to make a claim against the policy. The policyholder must pay the deductibles listed on the policy. Repair bills that are less than the deductible should be paid out of pocket
  • Loss of contents — Valuable items, including stereo equipment, taken from the car, by force, will be covered under the comprehensive component. Any valuable item that is damaged in a collision will be replaced by this coverage
  • Acts of God — Every insurance company has a different definition of “Acts of God.” All policy documentation should be reviewed to determine if the “Acts of God” clause is inclusive or exclusive. The use of this clause will determine if bizarre events are covered. Policy documentation is specific and legally-binding for the insurance company
  • Storm damage — Hail, falling trees and lightning strikes are just some of the weather-related damage that can occur. Floods, tornadoes, and hurricanes damage scores of vehicles every year. Comprehensive care insurance is more expensive in the areas of the country where these major weather events are more common. An insurance company representative can describe the most common events that occur in the area
  • Damage from animals — A mischievous raccoon or bear might tear up the interior of the automobile or the driver might hit a deer or elk. The damage done by an animal is covered under the comprehensive car insurance component
  • Fire damage — House fires and engine fires can cause substantial damage to an automobile. The cost of repairing or replacing the car will be covered under the comprehensive component

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Is comprehensive coverage necessary?

Any driver who is unable to pay for the replacement of the vehicle should consider adding this component to the auto insurance policy.

Very old vehicles might not be worth enough money to warrant the additional insurance cost during each policy period.

Once the loan is paid off, the driver can drop the insurance if he can afford to replace the vehicle.

If the driver decides to drop this component, sufficient funds must be saved to replace the vehicle with short notice. Lenders can require drivers to carry comprehensive insurance because of the risk of loss of the vehicle.

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Final Evaluation

Insurance companies use actual loss statistics within each zip code to determine the annual premium that will be charged for the comprehensive insurance component.

The driver’s address will play a significant role in the cost of comprehensive auto insurance. Those drivers who are least able to afford a new car must be wise in their insurance buying decisions.

For most drivers, automobiles are essential to go to work and conduct important life activities. Serious consideration must be applied to dropping any major insurance component.

Even during difficult economic times, the loss of a vehicle can cause significant financial hardship for anyone who incurs such a loss. Insurance companies offer healthy discounts for responsible driving habits.

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References:
  1. https://www.nationwide.com/car-insurance-policy.jsp
  2. https://www.allstate.com/tools-and-resources/car-insurance/liability-car-insurance-cover.aspx
  3. https://www.libertymutual.com/auto/car-insurance-coverage/collision-insurance
  4. https://www.allstate.com/tools-and-resources/car-insurance/what-is-comprehensive-auto-insurance.aspx

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