What is Comprehensive Insurance?
When you read the words "comprehensive insurance", what do you think of?
Obviously, just from those words, it feels like a pairing of pretty total and complete words. Not partial or half-measure, but insurance could apply to anything that needs ensuring.
To learn everything there is to know about comprehensive insurance, read on to find out all the details behind this specific kind of insurance policy and how it works.
Table of Contents
How does comprehensive insurance work?
In Canada, comprehensive insurance is optional coverage in every province except in Manitoba, where it comes included as “Part of All Perils” coverage, which includes collision coverage.
In the U.S., collision insurance is optional as well along with collision insurance. Even though it’s a usually optional coverage, a car rental or lease provider may require you to have it.
Comprehensive insurance pays up to the car’s actual value as a used car and may or may not include a deductible.
Let’s look at an example. Say a driver is in Pamplona, Spain, for the running of the bulls, and a bull damages their car.
Fortunately, they have a comprehensive insurance policy for $20,000 with a $5,000 deductible. The driver will receive coverage for $15,000 from the insurance company.
If he didn’t have the coverage, his other insurances might not cover it, and he’d have to cover the costs himself, get a loan for a replacement vehicle, or buy another vehicle that’s less expensive.
What does comprehensive insurance cover?
You should always check your own policy for specifics, but, generally speaking, comprehensive insurance covers any expenses that resulted from damage to your car, not caused by a collision with another vehicle.
These circumstances can include things like falling objects, weather, natural disasters, fire, vandalism, riots or other forms of civil disobedience, or collisions with an animal.
The insurance company will cover the costs if any of these misfortunes befall your car. Some comprehensive insurance policies may cover an even wider breadth of circumstances.
Do I need to get comprehensive insurance?
Though comprehensive coverage is only mandatory as part of All Perils Coverage in Manitoba, there are situations where not only do you need to get comprehensive insurance, but situations where you may want to choose comprehensive insurance as an option.
If you lease your car and are still paying for it, the lender may require you to have comprehensive insurance to cover the vehicle for whatever may happen while you’re driving it.
You may also consider where you park your care when considering whether you need comprehensive insurance.
If you park in an area where crime, theft, or vandalism are not uncommon, you may want comprehensive insurance.
Similarly, it may be appropriate in a rural region where you may get hit by wildlife or a natural disaster more often than another car.
Another reason to get comprehensive insurance is if your car is new or exotic and very expensive.
Remember, if you make a claim, the insurance company will reimburse you on a comprehensive insurance claim up to the car’s actual value on the used car market. That said if you’re driving an old clunker that you’d be ready to write off if a tree branch fell on it, maybe comprehensive insurance isn’t for you.
A good rule of thumb is that if the premiums you pay on comprehensive insurance are 10 percent or more of the car’s value, comprehensive insurance probably isn’t worth it.
Pros & Cons
Whether you choose comprehensive insurance as part of your car insurance coverage is up to you, but why not weigh the pros and cons of doing so?
Pros: The Good Stuff
Comprehensive insurance covers a wide variety of circumstances causing damage to your car unrelated to a car collision.
Comprehensive insurance will reimburse you up to the current actual market value of your vehicle.
Comprehensive insurance allows you to choose your deductible. The higher the deductible, the lower the premium.
Comprehensive insurance is optional and not mandatory in almost all Canadian provinces and U.S. states.
Cons: The Not So Good Stuff
Comprehensive insurance has a deductible.
Comprehensive insurance premiums are typically higher than collision coverage.
Comprehensive insurance triggers insurance riders for any rental car or roadside assistance options, which ups your cost for these services.
Our Final Thoughts
Choosing comprehensive insurance is based on the circumstances a driver finds themselves in regarding their vehicle use. It is not appropriate as a cover-all move for every scenario.
This statement is particularly true if your car’s actual market value is low and/or your car is more likely to be at risk for damage due to a collision with another car, more than any other circumstance you are likely to encounter.
However, if the value of your car is high and you live in an area where theft and vandalism are common, or, maybe even a rural area that faces the possibility of seasonal natural disasters, unexpected and extreme weather events, such as tornadoes, floods, hailstorms or heavy snow and rain, along with frequent encounters with large and imposing wildlife, then maybe comprehensive insurance is for you.
Be warned, though. Comprehensive insurance premiums are often higher than collision insurance, and the policy always carries a deductible.
This means that at least some of your expenses will come out of pocket, and your insurance provider won’t reimburse you for the entire cost of the damage.
Even with these disadvantages, comprehensive insurance is probably a good idea if you are leasing and still paying for your vehicle, especially if a lease requires you to return the car to the condition you found it in when you drove it off the lot once the lease expires.
On another note, comprehensive insurance is probably a good idea if you’re renting a vehicle, especially for a long road trip or camping trip.
Frequently Asked Questions
While comprehensive insurance and full coverage insurance may sound like the same thing using two different adjectives, sadly, they are not.
While comprehensive insurance only covers damage caused by negative incidents outside a collision with another vehicle and collision coverage does cover collisions with another vehicle, full coverage insurance combines comprehensive and collision coverage into one insurance type that covers both.
In fact, your insurance company may offer full-service coverage at a cheaper rate than it would cost to buy both collision and comprehensive coverage individually.
Except in specific cases, no. Comprehensive insurance is optional unless you live in the Canadian province of Manitoba, where it comes as a piece of the mandatory All Perils Car Insurance for that province.
You may also be required to purchase comprehensive insurance if you are leasing or renting a vehicle.
Otherwise, comprehensive insurance is an optional part of auto insurance coverage bought in combination with your mandatory auto insurance plan at an extra cost that will likely see you paying a higher premium.
It depends. If you anticipate finding yourself in circumstances where your car is more likely to get damaged by something other than a collision with another vehicle and your car's value is more than the cost of the premiums you will pay, then yes, comprehensive insurance is worth it.
The answer to this question is completely individual to your situation based on several factors, such as where you live and whether catastrophic events like natural disasters, extreme weather, or encounters with wildlife are more likely to happen.
It also depends on your car. Is it expensive enough to be worth repairing, instead of just going out and buying another used car should such an event occur.