What is Comprehensive Insurance?
Comprehensive insurance is optional coverage that protects you in the event your vehicle is damaged due to something other than a collision. This includes theft, vandalism, flood, hailstorm, and fire. In some states, comprehensive coverage includes glass replacement with no deductible—this varies by state, so ask your agent about the specifics when you purchase your policy.
Comprehensive coverage is usually sold with a deductible amount. A deductible is the out-of-pocket expense the insured agrees to pay before any payment from the insurance company kicks in. Deductibles of $250, $500 or $1,000 are fairly common. As a general rule of thumb – the higher the deductible, the lower the corresponding coverage premium.
Although comprehensive insurance is not required by any state, your lending institution may require this coverage if you are financing your auto in order to protect their insurable interest. Be sure to work with your agent in assessing your needs for this kind of insurance.
If you are financing your auto—depending on the term of your loan—it is possible that the vehicle will depreciate more quickly than the value of your loan. Keeping track of your vehicle’s depreciation value can help assess the benefits of paying the difference to the lender or purchasing gap insurance, which covers the difference between a vehicle’s actual cash value and the sum owed to the lender.