There’s uncertainty in everything. As you decide to have your life covered through insurance, so should your property. There’s more to a car than its model, jazziest color, and the snazziest safety features. Most of us know too little about it, comprehensive car insurance. Insurance is an indemnity. In case of an accident, the insurer covers the repair. The company accounts for the monetary value for which the car is covered.
Getting your car under insurance translates to paying for financial protection. Comprehensive or ‘fully comprehensive’ insurance is an optional insurance policy. It caters for damages to your vehicle, by things out of your control: also called “other than collision” protection. It’s optional coverage for things such as theft, fire, accidents, vandalism, etc. Many customers do not opt for this insurance due to its nature of coverage.
Upon application of a comprehensive car insurance, your insurance company determines the eligibility of your vehicle. Depending on the actual cash value of your car, you’ll be able to decide whether or not you need this policy or pass on. Below are three vital questions you need to ask yourself before settling for this coverage.
Why Should I Sign for a Comprehensive Insurance Coverage?
Fully comprehensive car insurance pays out within the value of your vehicle. The main reason why you should have a full coverage policy is the peace of mind it can buy you. You’ll rest assured of making an insurance claim anytime something unfortunate happens. It’s independent of whether it was your fault or a third party’s. You can also claim if you’ve found your vehicle damaged, but cannot prove who’s to blame.
Such damages are prevalent in crowded car parks and narrow streets. However, comprehensive car insurance doesn’t cover all circumstances. Each car insurance provider has its regulations that define what comprehensive insurance covers. It depends on your provider. For instance, some providers regulate that you won’t be insured to drive another vehicle with Comprehensive coverage. Others will provide a full cover equivalent to a third-party insurance policy if you’re driving another car when an accident occurs.
Therefore, it’s vital to thoroughly study and understand the terms and conditions of your policy. Also, as insurance regularly update their policies, ensure that you read any communications from them and note any changes.
What Does the Fully Comprehensive Policy Cover?
Different insurers have policies that vary in terms of what kind of cover they’ll offer. Mostly, fully comprehensive plans will be alike in what they cover. Fire or vandalism damage to your vehicle has the same cover as theft. For most car insurance providers, if your car is stolen as a result of negligence, your insurance provider is unlikely to payout. Generally, you’d claim a comprehensive cover if your vehicle is damaged by:
- Falling objects like tree limbs or rocks
- Hitting an animal
- Lightning, floods, or hail from thunderstorms, hurricanes, or tornadoes
- Explosions or fire
- Vandalism or civil disobedience like a riot
An injury caused by an accident involving your car where you’re at fault will be covered. Additionally, a hire vehicle to keep you mobile while repairs are being undertaken on your car is covered. It’s a wise idea to always check your comprehensive insurance before signing. There may be clauses that stipulate situations you can’t claim. Insurers will, from time to time, make certain car parts and benefits’ add-on extras’ to your comprehensive policy. Thus, demanding an additional fee on top of the standard price demanded for your cover. As a rule, never assume that everything is covered.
How Much Does Comprehensive Car Insurance Cost?
Insurance costs are based, partially, on what kind of a car you own. It’s true since the amount the insurance company covers is capped at the amount your vehicle is worth. A new comprehensive car insurance policy will increase your premiums; you can decide how much you want to pay. We’ll take a closer look at how and why that works.
If you have an insurance cover such as personal injury liability, you choose the amount you’d like to be covered. That dictates how much you pay. On the other hand, comprehensive insurance is based on two factors: your car’s actual cash and your deductible. But how do you calculate the real cash value?
The initial price of the car – (your car’s depreciation value + your deductible
The general idea is that it’s an approximation of what it would cost if you’re to replace your car with a similar one. If your car repair costs more than its actual cash value, your comprehensive coverage will compensate you with your car’s real value. You can also opt to keep your vehicle as it is in a total loss, such that the car’s salvage value is estimated and subtracted from your payout. The reason being, virtually, the insurance company owns your vehicle at that point. Hence, you’ll be repurchasing it from them.
Vintage or collector cars can’t be assigned a realistic actual cash value. Such vehicles are exempted from the real cash value rule. You and your insurer must agree on the value of your car when setting up your policy. That’s called a declared value policy. It takes the place of the actual cash value in calculating settlements.
How Deductible Affect Comprehensive Car insurance
Now we understand how actual cash value works. Let’s move on to the deductible. A deductible in car insurance is different from the one in health insurance. In the latter, the deductible is the amount you pay from your pocket before compensation from your comprehensive coverage kicks in.
For car insurance, you are required to pay for your deductible every time you make a claim. When you’re getting a quote, your insurer will let you experiment with the different deductible amounts. It is done to see how they affect your rate. According to Progressive, the average cost of insurance cover is $22 per month. Seventy-three percent of drivers select this coverage. For a progressive customer, $500 is the most deductible amount. However, some drivers go for deductibles as low as $100 to $300.
Whatever amount you opt for, keep in mind that if your claim is lower than your deductible, you won’t get coverage for the incident. Therefore, a low deductible is reasonable when you have to make a claim, but your premium is higher. To have your premium on the smaller side, you should opt for a higher deductible and accept that it won’t provide as much cover.
Comprehensive car insurance sounds like a great deal. After all, who wouldn’t want car insurance that’s “comprehensive?” Though a full cover is a smart choice, it ultimately depends on you and your car. It also largely depends on your ability to cope up with unexpected damage or total loss of your vehicle.