Reader Question What is Comprehensive Auto Insurance Coverage

Comprehensive auto insurance coverage pays for physical damage caused by a loss other than a collision, including:

  • Falling objects
  • Fire
  • Hitting an animal
  • Vandalism
  • Wind

This part of the auto insurance policy also pays out if the car is stolen and not recovered.

Comprehensive coverage pays out based on the car’s cash value, as opposed to its replacement cost or what the owner paid for it initially. When a policyholder makes a claim for damage to the vehicle, he or she must pay the deductible before the insurer will write a check. The deductible is the amount the owner agrees to pay toward the cost of settling a claim.

In a case where the owner has taken out a loan to pay for his or her car, the financing company will likely insist that comprehensive coverage be kept in place until the car has been paid off. Once that point has been reached, the owner can make a decision about whether to keep the comprehensive coverage in place or to limit it to fire and theft only.

If the car has little cash value, it may not make sense to keep the comprehensive coverage in place. The policyholder is paying premiums every month for a level of protection which decreases over time. A better choice may be to take the money saved on car insurance and put it aside to pay for a new vehicle.

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