What is Comprehensive Coverage? Explained

  • comprehensive auto insurance

When you have a car it is necessary to insure it so that you have the proper level of protection against any perils. It may be a new car or an old clunker that you drive every day. Or it could be a car you mostly store in your garage and drive during particular seasons only. As per insurance regulations by FSCO in Ontario, you could get comprehensive coverage as an option and is not mandatory. When  you weigh your risks in the event of a sudden incident, you may not want to be caught unawares.

In simple words, comprehensive coverage helps to cover for those damages that are not caused by another motorist or collision. It could be claimed up to the actual cash value of the car and the coverage limit you purchased.  Comprehensive does not cover all perils except collisions but is still recommended.

The list of perils covered by comprehensive coverage :

  • Vandalism that may be slashing the tires, keying, scratches on the body paint
  • Natural calamities such as a tornado, hurricane, flood, hail etc.
  • Theft or attempted theft of the car itself or any spare parts including accessories
  • Fallings objects that could be as bizarre as a missile or debris from construction site
  • Fire
  • Damage to the car due to hitting a deer on the highway
  • Damage to your car by animals such as a dog scratch
  • A civil unrest such as a riot or protest rally that may cause damage to your car or destroy it

Who Will Benefit From Comprehensive Coverage

It is vital to note that comprehensive cover will not pay for damages caused due to operating the vehicle or the actions of the driver such as hitting a fire hydrant. This coverage is optional but may benefit certain groups of auto consumers particularly.

Lease or Finance

If you have financed or leased your vehicle, the agreement with that company may require you to have a comprehensive coverage up to a certain limit. The amount you put down when you got your car may be very less with a lot of schemes with 0% down in the market. So the lease or finance company may want to have a comprehensive cover on the policy to protect them from a huge setback.

Vehicle in Storage

You may plan to go on a short vacation and store your car in the garage. If some untoward incident such as theft or storm caused damage to your stored car, you may regret not having comprehensive cover. You may save on premiums when you remove the comprehensive cover as you put the car in storage. On the other hand in case of damage, you may end up paying out of your pockets. It is a different logic if you are going away on a long trip such as more than a year or so and you decided to store your old clunker in the garage. If the car is not worth much you may not care about the damage.

New / Expensive Car

If you drive a trendy expensive car then you may want to consider adding comprehensive cover too. Firstly, expensive trendy cars are a favorite among thieves. So in the case of a theft or even attempted theft you may need comprehensive cover to file a claim. Secondly, it is very expensive to repair or replace parts for high-end cars. So if there is damage to any parts due to say hitting a deer, it could be covered under comprehensive cover.

What Is Not Covered By Comprehensive Coverage

A comprehensive cover does not pay for every kind of damage to your car that you may think of. The following mentioned perils are not covered by comprehensive:

Collision : In order to claim for any damages due to colliding with another car or object, you may have to claim under collision cover and not comprehensive.

Towing and labor costs: If your car stops in the middle of nowhere, you may have to hire towing service. Or you may have to contact a roadside assistance company. If you are a member of an auto club, good for you as they may help you out. Otherwise, such services are not covered by the comprehensive cover and you may have to pay yourself.

Minor Repairs: Changing gas, tires, reviving a dead battery or replacing it with a new battery etc. are not covered either. So is getting a replacement key when you get locked out of the car. All these are unexpected events and may not be covered by the comprehensive cover and cannot be claimed for. Again an auto club membership such as with CAA may be the best bet to bail you out of such a situation.

Rent reimbursement: If you rented a car for any reason that rental amount cannot be claimed under comprehensive cover.

Property damage : Any damage to property caused by your car even your own garage may not be claimed under comprehensive.

How Are Insurance Rates Calculated For Comprehensive Coverage

The insurance rates vary with each quote as it is based on vehicle and driver profile among other factors. The calculation of premiums for comprehensive coverage could be different from how premiums are calculated for other coverage. Most other coverage premiums are calculated based on the protection limit that you purchase. Whereas, premiums for comprehensive cover may depend mostly on the amount of deductible you choose. The more deductible you choose, the lesser will be your premium. But you may also note that in the case of a claim, you may spend more due to the higher deductible.

So, it is a decision of choice between $250, $500 or $1,000 deductibles. Then the one variable that you could consider to choose your deductible is the value of your car. If your car is worth $2000 or more then it may be a wise idea to choose a median deductible such as $500. Or if your car is worth less than $1000 you may think of getting the $250 deductible. In the event of damage, it is your call if you want to pay for minor repairs out of your pocket rather than claim.


Resources:

http://money.howstuffworks.com/personal-finance/auto-insurance/comprehensive-auto-insurance-cover.htm

https://www.fsco.gov.on.ca/en/auto/brochures/pages/brochure_autoins.aspx