What is Comprehensive Auto Insurance Coverage?

Comprehensive auto insurance coverage is an example of physical damage protection. (Collision coverage is the other one.) It pays for damages caused by events other than an accident, including:

  • Falling objects
  • Fire
  • Flooding
  • Hail
  • Theft
  • Vandalism

This type of coverage is not required under state law. A new car owner may want to add it to his or her policy, though, since it pays for the cost of repairs to the vehicle. A buyer who took out a loan to finance the vehicle may be required to keep full coverage (collision and comprehensive insurance) in place until the car has been fully paid for. In the case of a total loss or if the car is stolen and not recovered, the insurance company will pay out based on the car’s cash value, less the deductible the policyholder has chosen.

The policyholder will also need to pay the deductible before the insurance company will pay anything toward repair costs for the types of losses listed above.

Vehicle owners who are driving an older model car may want to consider limiting the comprehensive auto insurance part of the policy to fire and theft only. Since this type of protection pays out based on the car’s cash value, it doesn’t make good economic sense to keep full coverage in place if the car is fully paid for. Limiting the physical damage coverage to fire and theft only will result in savings on the cost of comprehensive auto insurance coverage.

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