Comprehensive Insurance

Comprehensive Insurance

  • Comprehensive insurance works similar to any other type of auto insurance if you need to file a claim. But if you’ve never had to do so, it helps to have an illustration, so you know what to expect.
  • Here’s an example of how comprehensive insurance works if a driver files a claim for vehicle damages.
  • Say someone drives a Honda Accord worth $10,000, with a $1,000 comprehensive deductible. If a tornado destroys the car, the driver will receive $9,000 from the insurance company.
  • If they don’t have comprehensive coverage and a tornado destroys the vehicle, the collision and liability portions of the policy won’t cover the damage.
  • The driver will be responsible for the entire $10,000 loss. A driver might have to get a loan to purchase a replacement vehicle or settle for something less expensive if they don’t have $10,000 to spend on an equivalent replacement.
  • Seeing an example of comprehensive insurance in action can offer some perspective on how valuable it can be if your car is damaged.
  • If you’re leaning more toward the “when to drop comprehensive insurance” side, it’s helpful to know how much damages may cost you to repair out of pocket.

What Is Comprehensive Insurance?

Comprehensive insurance is a type of automobile insurance that covers damage to your car from causes other than a collision. Comprehensive insurance will cover your vehicle if destroyed by a tornado, dented by a run-in with a deer, spray-painted by a vandal, damaged by a break-in, or crushed by a collapsing garage, among other causes. 

  • Comprehensive insurance is designed to pay for repairs to your vehicle caused by things other than a collision.
  • If you finance a vehicle purchase, you may be required to purchase comprehensive coverage as well as collision coverage.
  • Purchasing comprehensive coverage may not make sense financially if you drive an older vehicle that’s already lost a significant amount of value.
  • Raising your deductibles for comprehensive insurance could help to lower your premiums.

Comprehensive Insurance means

Comprehensive insurance, collision insurance, and liability insurance are the three components of an automobile insurance policy. In most states, the law requires drivers to carry liability insurance, but collision and comprehensive insurance are optional if someone owns a vehicle outright. If a person has financed the vehicle, the auto loan company might require comprehensive insurance.

Do i need comprehensive and collisionComprehensive Insurance vs. Collision Insurance

Comprehensive vs. Collision Coverage: Key Differences (2022)
  • It can make sense to have comprehensive car insurance if you’re buying a brand-new car, regardless of whether you finance it or pay cash.
  • Comprehensive coverage can protect you against minor and major damages caused by things beyond your control, regardless of whatever coverage you may have that extends to accidents.
  • Where you live can also play a part in your decision of when to have comprehensive coverage. If a person lives in a rural area where collisions with animals are common or in a stormy area that often gets hail, they might want to purchase comprehensive insurance.
  • The same is true if a person lives in a higher-crime part of town where break-ins and theft occur regularly.
  • Collision insurance protects you in a single-car rollover, a collision with another vehicle, or a collision with an object. It does not cover break-ins or thefts, or weather-related damage.
  • If you lease a car, you’ll be required to purchase collision insurance. Collision insurance comes in handy when you get into an accident to help pay for your vehicle’s repair, and it covers any damage to your car due to potholes in the road.
  • Neither insurance will cover medical bills from an accident or damage to another person’s vehicle if you are in an accident.

is comprehensive insurance full coverage?

In terms of what comprehensive insurance covers, the list includes damages related to.

  • Contact with animals, such as hitting a deer
  • Natural disasters, including earthquakes, floods, and hurricanes
  • Fire
  • Riots and vandalism
  • Vehicle theft, or theft of certain parts of the vehicle
  • Broken windshields
  • Fallen objects, including branches, rocks, or hail

Cost of Comprehensive Insurance

  • Comprehensive covers damage to your car caused by accidents and disasters beyond car accidents. The average cost of comprehensive is approximately $134 per year, according to the Insurance Information Institute.
  • However, Insurance.com reports that figure is $192, depending on the state you live in. Either way, you are looking at under $200 a month just for comprehensive insurance for your car.
  • Collision and comprehensive insurance each have their deductibles (liability insurance has no deductible), so a driver can choose different deductibles based on perceived risk levels in each of these areas.
  • For example, if someone thinks they’re not likely to file a comprehensive claim, but they don’t want to forego comprehensive insurance altogether, they could choose a relatively high $1,000 deductible to lower the premiums. The higher a vehicle’s cash value, the more expensive a comprehensive insurance policy will be.
  • Understanding how insurance companies determine driver risk classes can help you estimate what you might pay for comprehensive coverage. Where you live, your driving record, and your coverage amounts can determine how much you pay for car insurance, including comprehensive coverage.
  • For example, the most expensive state to insure a car is in Louisiana, where the average driver spends $1,545 on full car insurance each year.6 The least expensive state, by comparison, is North Dakota drivers pay just $686 per year on average to insure their vehicles.

Advantages and Disadvantages of Comprehensive Insurance

Comprehensive auto insurance protects you financially from theft, natural accidents, and weather-related damage. This insurance means you won’t end up paying out of pocket if a tree falls on your car or a thief takes off with it in the night.

There are downsides. If you are in an accident, comprehensive insurance won’t pay for the damage. And comprehensive insurance may be expensive if you are purchasing it along with collision insurance. If your vehicle is older and paid off, you could save money by not purchasing comprehensive coverage, especially if theft and weather-related events are not concerns where you live.

  • Comprehensive coverage protects you against theft, weather-related events, and other major things beyond your control.
  • Comprehensive coverage often covers “unforeseen events” like break-ins or broken windshield wipers due to hail.
  • If you own a new car and live in a high-crime area, comprehensive insurance will cover the damages caused by any break-ins or thefts.
  • Comprehensive insurance doesn’t damage caused by a collision.
  • It may not be necessary to have for an older car with high mileage.
  • Comprehensive insurance doesn’t cover anything personal stolen from your car.
  • It doesn’t cover damage due to pot holes.

Comprehensive Car Insurance

Comprehensive insurance is a type of auto insurance that can help provide financial protection if your car is damaged by something other than a crash. It can come in handy if you need to pay for damages that stem from natural disasters, theft, or vandalism. It may even be required if you finance or lease your vehicle. Here’s what you should know about comprehensive coverage, including what it covers and when it may make sense to add this type of policy to your existing coverage.

Comprehensive car insurance means

  • Comprehensive coverage helps cover the cost of damages to your vehicle when you’re involved in an accident that’s not caused by a collision. Comprehensive coverage covers losses like theft, vandalism, hail, and hitting an animal.
  • For example, if you are driving and hit a deer, the damage would be covered under comprehensive coverage. However, if you swerve to miss the deer and hit a tree, comprehensive coverage doesn’t apply because this type of accident is considered a collision with an object.
  • Comprehensive coverage is an optional coverage you can carry to help protect your vehicle. Unlike some coverages, you don’t select a limit for comprehensive.
  • The most it will pay is based on the actual cash value of your vehicle. You will be responsible for paying your selected deductible.

what is comprehensive car insurance?

  • Comprehensive insurance is a car insurance policy that covers certain damages to your vehicle that are not caused by a collision with another car. It is required on leased vehicles, and on vehicles that are currently being paid for by a loan.
  • Comprehensive auto insurance is supplementary, meaning it’s an optional coverage which can be added to an insurance policy. For maximum protection, you can pair comprehensive coverage with liability and collision coverage, or choose classic car insurance that provides flexible usage and coverage designed specifically for classic cars.
  • If you’re wondering “What is comprehensive insurance going to do for me?”  Here’s an example: you’re dashing out of your house for work in the morning and as you’re opening the driver’s side door of your car, you realize a baseball-sized chunk of hail has crashed through your windshield. You think to yourself, all windshield damage is equal under my state-minimum insurance policy, right?
  • Wrong. To avoid paying for damages like this out of pocket, you need comprehensive insurance. A windshield shattered by hail would be covered by comprehensive insurance, while a windshield shattered by a traffic accident would be covered by either your collision insurance or the other driver’s liability insurance.

What does comprehensive car insurance cover

Comprehensive car insurance covers damages to your car which are caused by things other than collisions. This can include damages that result from events like:

  • Natural disasters (e.g., earthquakes, floods, hurricanes, hail, and tornadoes)
  • Fire
  • Riots
  • Vandalism
  • Theft
  • Falling or projective objects (e.g., trees, branches, or ice) 
  • Broken windshields
  • Damage caused by animals (e.g., wiring damaged by a rodent or a deer running in front of your car)

How Does Comprehensive Coverage Work? 

If your vehicle is damaged and covered under a comprehensive insurance policy, you can contact your insurer and file a claim. If the claim is approved, you’ll pay your deductible, or the amount of money you agree to pay out of pocket when filing a claim. Your insurer will cover the remaining expenses. Comprehensive insurance limits usually are based on the actual cash value of your vehicle at the time of the accident (not what you paid for it).

If your car sustained $5,000 in damages after a windstorm and you have a comprehensive policy with a $500 deductible, you’d pay $500 towards the cost of repairs. And, provided your car’s value is higher than the cost of repairs, your insurer will cover the remaining $4,500. However, if your car’s value is lower than the cost of repairs, your insurer will likely issue payment for the actual value of the car.

What Does Comprehensive Insurance Cover

Your comprehensive insurance pays for damage caused by: 

  • Natural disasters, like hurricanes or tornados
  • Vandalism
  • Theft
  • Fire
  • Falling objects
  • A civil disturbance, like a riot
  • Hitting an animal, like if you hit a deer
  • Glass damage

Your comprehensive car insurance policy will not help cover: 

  • Damage to your car from a collision
  • Medical expenses
  • Legal fees
  • Lost income for you or your passengers if you miss work after an accident
  • Damage to another person’s car from a collision
  • Property stolen from your car.

What Isn’t Covered by Comprehensive Car Insurance?  

Comprehensive insurance is limited to damages that aren’t caused by a collision. This type of policy typically does not cover:

  • Damages to another vehicle
  • Medical expenses for you, another driver, or passengers
  • Legal expenses that result from an accident
  • Personal property stolen from your vehicle

It’s worth noting that coverage can vary by insurer and state. Always check with your insurer to understand your policy, including covered perils and any limitations or restrictions.

What is third-party insurance?

What is Third Party Insurance | What is Third Party Insurance for Car

Third-party insurance is a policy purchased by the insured (first-party) from the insurance company (second party) for protection against the claims of another (third party).

  • Third-party insurance covers an individual or firm against a loss caused by some third party.
  • An example is automobile insurance that will indemnify the insured if another driver causes damage to the insured’s car.
  • The two main categories of third-party insurance are liability coverage and property damage coverage.
  • Most people are required by law to carry different forms of insurance on their homes and vehicles.
  • Third-party insurance is essentially a form of liability insurance. The first party is responsible for their damages or losses, regardless of the cause of those damages.
  • One of the most common types is third-party insurance is automobile insurance.
  • Third-party offers coverage against claims of damages and losses incurred by a driver who is not the insured, the principal, and is therefore not covered under the insurance policy.
  • The driver who caused damages is the third party.
  • There are two types of automobile third-party liability coverage:
  • Bodily injury liability covers costs resulting from injuries to a person. These injuries’ costs could include hospital care, lost wages, and pain and suffering due to the accident.
  • Property damage liability covers costs resulting from damages to or loss of property.
  • Examples of property damage include the payment to replace landscaping and mailboxes and compensation for loss of use of a structure.

Third-party insurance benefits

  • As the law requires, drivers must carry at least a minimal amount of bodily injury liability and property damage liability coverage.
  • A few states do not require both or have other limitations. Each state sets its minimum requirement for each type of coverage.2
  • Even in “no-fault” states, liability coverage is all but essential. No-fault laws were established to reduce or eliminate ordinary injury lawsuits affixed with low-dollar price tags and an overwhelming number of claims for pain and suffering.
  • Still, no-fault laws do not protect the insured from million-dollar injury lawsuits stemming from seriously injured third parties.3
  • Both types of third-party insurance are essential, specifically for individuals, such as homeowners, with substantial assets to protect.
  • The more money and assets an insured has, the higher the limit should be for each type of liability coverage.

third party insurance claim

When you file an insurance claim against another person’s policy, it’s a third-party claim. You might file a third-party claim if:

Difference Between First-Party and Third-Party Motor Insurance Claim - ABC of Money
  • You were involved in a car accident, you weren’t at fault, and the accident didn’t occur in a no-fault state. Instead of filing a claim with your provider, you would file a claim against the at-fault driver’s insurance policy.
  • You were a passenger involved in a car accident. As a passenger, you wouldn’t need to file a claim against your policy. Instead, you would file one against the driver in the car you were in or another driver who caused the accident.
  • You were injured at work because a machine had faulty parts. You might file a claim against the insurance policy of your company or of the third-party manufacturer or machine provider.
  • You were injured at someone’s house. Your homeowner’s policy wouldn’t be in play. Instead, you’d file your claim against the policy of the homeowner where you were injured.
  • You were injured at a retail store. You’d file a claim against the store owner’s insurance policy.
  • Almost every third-party claim is liability-related. The person at fault for the accident is the individual whose policy covers the injury.
  • In some insurance policies, policyholders have coverage for third-party claims. This type of coverage protects the policyholder from being held personally liable for the expenses associated with an accident or injury.

What Are the Types of Third-Party Automobile Insurance?

There are two types of automobile third-party liability coverage: bodily injury liability and property damage liability. Bodily injury liability covers costs resulting from injuries to a person. These injuries’ costs could include expenses like lost wages, pain and suffering, and hospital care bills due to the accident. Property damage liability covers costs resulting from damages to or loss of property, like putting in new landscaping materials or fences. If someone destroys your mailbox, it might be covered, as well as compensation for loss of use of your home.

What Are Other Types of Third-Party Liability Insurance?

  • Public liability insurance involves industries or businesses that take part in processes or other activities that may affect third parties, such as subcontractors, architects, and engineers.
  • Here, the third party can be visitors, guests, or users of a facility. Most companies include public liability insurance in their insurance portfolio to protect against damage to property or personal injury.
  • Product liability insurance is typically mandated by legislation, which varies by country and often varies by industry. This insurance covers all major product classes and types, from recreational equipment to chemicals and agricultural products.
  • The insurance is to shield companies against lawsuits due to products or components that cause damage or injury.

What Is the Significance of Third-Party Insurance?

Third-party insurance is essentially a form of liability insurance. A third-party insurance policy is purchased by the insured (first party) from the insurance company (second party) for protection against the claims of another (third party). The significance of third-party insurance is that it offers the insured coverage for injury or damage they have caused.

comprehensive deductible

A good comprehensive deductible is an amount that the policyholder can afford to pay if their vehicle is suddenly damaged by something other than a car accident, such as vandalism or a natural disaster. Comprehensive insurance deductibles typically range from $100 to $1,000, but they can sometimes be as high as $2,500. You choose your deductible when you purchase your policy, and the higher the deductible is, the lower your premium will be.

Comprehensive Deductible Example

As a reminder, a comprehensive deductible is the amount that you have to pay out-of-pocket when filing a comprehensive insurance claim. For example, if a hailstorm causes $5,000 in damage to your car and you have a $1,000 deductible, your insurance company will only pay $4,000 for the repairs.

Comprehensive general liability insurance

Commercial General Liability Insurance

Commercial general liability (CGL) is a type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’s operations, products, or injuries that occur on the business’s premises. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a business may face.

  • Commercial general liability (CGL) is a form of comprehensive insurance that offers coverage in case of damage or injury caused by a business’s operations or products, or on its premises. 
  • There are two types of CGL policies—a claims-made policy that covers claims regardless of when the event took place, and an occurrence policy where the event must take place during a set period. 
  • Companies can add other companies or individuals they contract with to their commercial liability insurance policy as an “additional insured.”

Understanding Commercial General Liability (CGL)

  • Commercial general liability policies have different levels of coverage. A policy may include premises coverage, which protects the business from claims that occur on the business’s physical location during regular business operations.
  • It may also include coverage for bodily injury and property damage that is the result of a finished product or service done on another location.
  • Excess liability coverage can be purchased in order to cover claims that exceed the limit of the CGL policy. Some commercial general liability policies may have exclusions to what actions are covered. For example, a policy may not cover the costs associated with a product recall.
  • When purchasing commercial general liability insurance, it is important for the business to differentiate between a claims-made policy and an occurrence policy.
  • A claims-made policy provides coverage for whenever a claim is made, regardless of when the claim event happened. An occurrence policy is different in that it covers claims where the claim event occurred during the time of the policy even if the policy is now expired.
  • In addition to commercial general liability policies, businesses may also purchase policies that provide coverage for other business risks.
  • For example, the business may purchase employment practices liability coverage to protect itself from claims associated with sexual harassment, wrongful termination, and discrimination.
  • It may also purchase insurance to cover errors and omissions made in financial reporting statements, as well as coverage for damages, resulting from the actions of its directors and officers.

Example of Commercial General Liability (CGL)

Some examples that would require CGL include the following:

  • A customer enters your place of business where the floors have recently been cleaned and polished, and as a result are very slippery. The customer slips on the floor and breaks their leg.
  • One of the employees of your electrical company visits a home for an electrical wiring job and accidentally causes a fire in the customer’s home.
  • An advertisement you placed results in an individual claiming libel or slander.

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