A well-established financial institution, Ameriprise also offers auto, home and life insurance policies. It sells standard policies at middle-of-the-road rates. Ameriprise recently sold its home and auto [...]
What is comprehensive insurance?
Comprehensive insurance, which is part of an auto insurance policy, offers protection from a wide range of damages that may occur to a driver’s vehicle.
What does comprehensive insurance cover?
Comprehensive auto insurance covers damages caused by incidents other than collisions. These include animal damage, falling objects, weather, vandalism, fire and theft.
While the law does not require car owners to have comprehensive insurance, it is a good idea to have it to protect the vehicle in case of accidents. Typically, a driver is required to have collision insurance first before he or she can buy comprehensive coverage.
If a driver has a lease or loan on his or her vehicle, the lending company may require him or her to buy full coverage for his vehicle.
The cost of comprehensive coverage largely depends on the deductible amount — the amount of expenses that need to be paid out of pocket before the car insurance provider will pay any expenses which typically ranges from $250 to $1,000.
A higher deductible means that a person will have to cover more damages before the car insurance coverage starts, but it also reduces the overall premium. Raising deductibles can reduce premiums and keep individuals from filing small claims that could cost them a claims-free discount.
For instance, increasing a deductible from $200 to $500 can reduce collision and comprehensive insurance premiums by 15 percent to 30 percent; increasing it to $1,000 can save 40 percent or more.
The kind of car insured also affects the rate of the comprehensive coverage. A make or model of car that has high repair costs and a high number of claims will have a higher insurance premium.
Comprehensive on a car insurance policy will cover the repair costs of the vehicle, provided that the damage is caused unintentionally. If the other driver is proven responsible for damage, the comprehensive coverage part of the policy will pay to repair or replace the vehicle (less the deductible).
Then, the insurance provider will try to file a lawsuit against any responsible party, who may have their own liability insurance to recover the cost of damage.
Comprehensive insurance example
Comprehensive insurance serves as a security blanket because you never know when disasters or other incidents can occur. Drivers who live in areas prone to severe weather conditions or natural disasters will find comprehensive insurance a necessity, but the insurance rates can be expensive.
On the downside, some car insurance policies do not cover certain types of damage, such as damage to satellite radio systems or GPS navigation systems that are not permanently installed in the vehicle, while others limit the amount of the coverage for such items.
So, understanding the fine print is important when buying comprehensive car insurance.