What Is Comprehensive Vehicle Insurance?

Automobile insurance contracts have different sections to provide insurance for you, your vehicle, the other driver, his vehicle and any structural damage resulting from an accident. The agreement or contract sets out what coverages you have, and state laws interpret the contract. The comprehensive section of your car insurance covers damage to your vehicle.

Function

• When you purchase automobile insurance, you may choose to buy only liability coverage, covering the other driver, his passengers and his automobile. Most states only require liability insurance coverage. If you have a lien on your automobile, the loan company may require you to have insurance that covers your vehicle. Insurance for your vehicle includes comprehensive and collision. When you have liability insurance for the other driver plus comprehensive and collision for your car, the insurance agent and your loan company refer to this as "full coverage."

Benefits

• Comprehensive automobile insurance pays if something happens to your vehicle that doesn't involve a collision. This includes falling objects, fire, theft and vandalism. Comprehensive insurance coverage may include an agreement to pay for a rental vehicle if yours is out of service because of a covered event.

Deductible

• Comprehensive insurance has a deductible, the amount you pay before the insurer pays anything. A low deductible is $200, and in exchange for a low deductible, you pay a higher premium. You can raise the deductible to $1,000 and pay less for your comprehensive insurance, but you will pay the first $1,000 for any comprehensive claim.

Effects

• Many vehicle owners choose not to carry comprehensive automobile insurance on their vehicles. Once you pay for the automobile, insurance is not required by the loan company or state law. Weigh the risks and the cost to determine if you want to keep comprehensive coverage or not. If you can afford the expected insurance payment better than the unexpected cost of repairs to your car, you may choose to continue to pay for the insurance. When the annual cost of the insurance is more than 10 percent of the value of the car, most financial analysts suggest that the insurance is not a good expenditure.

Limits

• In addition to the deductible you choose to pay under the terms of the agreement, your comprehensive automobile insurance coverage pays only the actual cash value (ACV) of the vehicle, as determined by Edmunds.com or Kelley Blue Book. If these authoritative sources value your vehicle at $2,000 and you have a $500 deductible, your insurance will pay a maximum of $1,500.