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How does comprehensive car insurance work?

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Auto insurance can be confusing, especially if you are a first-time car or truck owner. One of the more misunderstood terms you will often encounter, is comprehensive insurance. As one of the three main components of a car insurance policy, this form of coverage sits right alongside liability insurance and collision insurance.

If you are clueless about how comprehensive insurance works, read on. We’ll talk about what it covers and costs while considering a few lesser-known facts that you will want to know.

What is comprehensive car insurance?

In a nutshell, comprehensive car insurance is an optional “add-on” protection plan, guarding against non-collision vehicle damage. Meaning, it is not a stand-alone policy, but an addition to an existing insurance policy. Covering damages outside accidents has led some to call it “other-than-collision” coverage. While another insurer might use the term “full coverage.”

However, do not be confused. When they call it full coverage, it means that it is bundled with collision insurance. Full coverage might also require other types of state-required insurance.

Regardless of what the coverage is called, the fact remains that even the most tech-advanced cars and safest trucks can be prone to non-collision damage. It is the one thing you cannot control while behind the wheel. What you can control, however, is the financial impact of such damages, which is precisely where comprehensive coverage comes into play.

How does comprehensive car insurance work?

Let’s say your car was hit by a hailstorm and ended up being damaged while parked outside your house last night. The roof has a dent and the windshield is shattered. This is not the result of a collision, and if you have comprehensive insurance, the policy will likely cover the damages. After you cover the deductible, of course.

Ah yes, the good old deductible. This is the amount you must shoulder in order for the insurance to kick in. So if the deductible is $500, you will need to pay this upfront when filing the claim. If the cost of repair is $1,500, you will pay the $500 deductible, and the insurer will cover the remaining $1,000.

Actual cash value is another element that can influence comprehensive insurance coverage. In case of theft or total damage to the vehicle in something like a flood, the actual cash value could be what the insurer will pay. Naturally, the depreciation of the vehicle must be factored into the equation.

Together, the deductible and actual cash value work hand-in-hand in determining the amount you can get from a comprehensive insurance plan. It is the actual cash value, less deductible. Therefore, if the actual cash value is $10,000, and the deductible is $1,000, the insurer will pay you $9,000.

Is comprehensive car insurance a mandatory requirement?

Comprehensive insurance is by no means mandatory. Hence, it is not a necessity, and not having it will not break any laws.

What does comprehensive car insurance cover?

In general, comprehensive insurance covers damages from disasters other than collisions. Some of the most common inclusions are vandalism, contact with animals, natural disasters, and fallen objects.

More so, comprehensive insurance also covers the theft of a vehicle, as well as its parts. Oftentimes, this includes catalytic converter theft, a pricy part to wake up to find missing.

What does comprehensive car insurance not cover?

Comprehensive insurance does not cover accidents and non-vehicular collisions. Collisions with trees and road hazards are just as out of the equation as a flipped truck. More so, it won’t cover medical expenses from auto-related injuries. It also does not cover normal wear and tear, such as underbody rust, or stolen personal belongings from inside the vehicle.

How much does comprehensive car insurance cost?

The cost of comprehensive insurance is $134 on average, with costs varying from insurer-to-insurer, and state-to-state. It is also cheaper than collision coverage, while being equally critical, especially if you live in an area prone to natural disasters or with a high crime rate.

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