Comprehensive Insurance Coverage

The need for personal transportation goes hand-in-hand with the need for insurance. You can be the most attentive, careful, and non-distracted driver in the world, but there are accidents that happen and damages that can occur to your vehicle that are completely out of your control. When one of these instances does occur, it is your comprehensive insurance policy that will cover those damages.

Comprehensive insurance coverage will come into play anytime your vehicle needs to be replaced or repaired due to theft or an incident that isn't a collision. If you're leasing your car or have financed it, the lender usually requires you to carry comprehensive coverage. If you own the vehicle and it's paid for, comprehensive coverage is optional but is a very good idea to have.

What Does Comprehensive Insurance Cover?

If your car has been damaged in an incident that wasn't a collision, comprehensive coverage can help pay for the repair or replacement. Some incidents that could warrant use of your comprehensive coverage include:

• • Theft

• Vandalism
• Fire
• Natural disasters, such as a hurricane or a tornado
• Falling objects
• Damage from hitting an animal while driving
• Damage from a civil disturbance, such as a riot

There are also several things that a comprehensive policy won’t cover, such as:

• Damage done to your vehicle from a car collision
• Damage done to another person’s vehicle from a collision
• You or any of your passengers’ medical costs due to an accident

Comprehensive Policy Deductibles and Limits

When you select and purchase your comprehensive insurance policy, you’ll be able to select a deductible amount. The deductible is the amount you pay out of pocket toward a covered claim before your insurance kicks in. The higher you set your deductible, the lower your insurance premium. Conversely, the lower your deductible, the higher your insurance premium.

Here’s now a deductible works: Let's say you have chosen a $500 deductible. You've accidentally hit a deer while driving, and the damage to your vehicle comes to $1500. If your claim is covered, you would pay the deductible of $500, and the insurance company would pay the balance of $1000 out of your policy. This may seem like the deductible is quite expensive. But consider a situation where, instead of hitting a deer while driving, a tornado causes a tree to completely crush your car, and totals it. In this scenario, you would only have to pay the $500 deductible, and your insurance company would issue you a check for the value of your car (up to the limit of your policy) with which to purchase another vehicle. Now that $500 doesn't seem so expensive at all.

Each insurance policy also has a limit of coverage. The limit is simply the maximum amount the policy will pay toward a covered claim. For a comprehensive insurance policy, the limit is normally the cash value of the vehicle. And this makes sense. Due to the nature of a comprehensive policy, it will only pay the cost to replace your vehicle at its current value, but no more than that.

Let's say that your car was stolen. You bought it three years ago brand new. The replacement value of your car would be very different from the brand new value due to depreciation. You would not be able to replace your vehicle with a brand new vehicle unless you use some of your own money to do so - your comprehensive policy will only pay out the value of your vehicle today, which takes into consideration depreciation.

Comprehensive vs. Collision Insurance

While comprehensive insurance coverage serves to protect you from non-collision vehicle damage, collision coverage protects your vehicle from damage that was caused in an accident involving a collision with another vehicle, or collision with an object such as a fence or building.

Both types of policies require that a deductible is paid before the insurance policy pays anything and both set the coverage limit at the replacement value of the vehicle.

Why You Need Comprehensive Insurance Coverage

There are several solid reasons why comprehensive insurance coverage is necessary. Consider the following:

• If you are leasing or financing your vehicle, the lender very likely requires you to carry both comprehensive and collision coverage. Once you pay the vehicle off and have a clear title, it is your choice whether to continue paying for the coverage or not.
• While comprehensive coverage is optional if you have paid off your vehicle, you must ask yourself if you would be able to pay to repair or replace your vehicle in the event of an accident or a theft. If the answer is no, purchasing comprehensive insurance is a good idea.

• The Insurance Information Institute suggests that you calculate the amount of one year of comprehensive and collision coverage multiplied by ten. If your vehicle is worth less than that number, you may not really need those coverages. Your best bet is to talk to an insurance representative who can help advise you.

Most of us need to drive every single day, and in order to do that safely with the least amount of risk, we need insurance to protect us in the event of an accident. Having comprehensive insurance on your vehicle is one of the best ways to protect both your vehicle and your financial security in the event that something goes awry.

We at The Sevey Law Firm are here to answer any questions you have. We encourage you to contact us today to schedule a time to talk to one of our experienced and skilled attorneys. You can reach us by phone at (916) 788-7100 or online at our website.