-
Overview
What Is a Comprehensive Car Insurance Loss?To get understand what a comprehensive car insurance loss is, you should have a basic understanding of the auto insurance policy and how it protects not only the policyholder but also the general public. With a general overview under your belt, it is easier to recognize the difference between a comprehensive and collision loss.
Auto Policy Structure
An auto policy is considered a mini package policy. What that means is that it provides coverage for a third party (someone else) and a first party (you). In the world of insurance, there are three parties; party number 1 is the insured, party number 2 is the insurance company and party number 3 is the person who can make claim against you.
Liability
The liability section of an auto insurance policy provides coverage to protect the third party. State law mandates minimum liability limits. Each state sets a limit that a driver must purchase to operate a vehicle on public roads. Each state's requirement differs. It is conceivable and perfectly legal to purchase an insurance policy with auto liability only and no physical damage coverage.
Physical Damage
This is the coverage that protects the financial investment of the policyholder and the finance company. While the state may deem it perfectly legal to purchase an auto policy without this coverage, policyholders can still get in legal trouble if the financing contract stipulates a limit for comprehensive and collision (physical damage) coverage. Finance companies must protect their financial interest in your vehicle.
Comprehensive
The best way to describe comprehensive courage is that it is a first-party coverage that covers physical damage to the insured vehicle that arises from an incident other than a collision. For example, if your car is stolen, it's a comprehensive loss. If your car is vandalized or falls off a bridge into a lake, it's comprehensive. The loss is a noncollision loss.
Collision
Collision losses are straightforward and easy to determine. If a car collides with another car, a wall or other object, it's covered under the collision section of the policy.
Deductibles
Both the comprehensive and collision losses are subject to policy deductibles. Deductibles are the out-of-pocket expenses the policyholder has to pay for each and every comprehensive or collision loss. A high deductible saves money on the auto insurance premium, but it costs more in out-of-pocket expense per comprehensive or collision claim. Therefore, take time to consider how much of a deductible you can afford, both from an out-of-pocket expense and a premium savings point of view.
