Is There a Deductible on Comprehensive Auto Insurance?

By Bill Herrfeldt

  • Overview

    Comprehensive automobile insurance covers your vehicle and others, depending on the circumstances, for any incident other than a collision. It covers your vehicle, for instance, if it or any of its contents are stolen, your car is damaged by a flood or a fire, or your car is ransacked. You can lower your premium by choosing a higher deductible amount on your comprehensive automobile insurance coverage.
  • Significance

    Although comprehensive automobile coverage costs less than collision insurance, you can lower that cost even more by asking your agent for a higher deductible under that coverage. But you should choose a deductible amount that you can comfortably pay out of your pocket.
  • Required Coverage

    The coverage provided by your comprehensive automobile insurance will be limited by the conditions and terms of your policy, so read about this carefully. There are no state laws requiring that you carry comprehensive coverage of your automobile, but if there is a loan outstanding on the car, or you have leased it, you may be required to buy comprehensive coverage.

  • Considerations

    You should consider adding comprehensive coverage for your vehicle if it is new or in good condition because you will need funds to either repair or replace your vehicle as a result of a loss. However, if you are driving an older car, or if it is in poor condition, you probably can avoid comprehensive coverage.
  • Payment

    Automobile insurance companies use the deductible feature on comprehensive vehicle coverage, by and large, as a way to gain a competitive advantage over competition rather than to save you money. Instead of offering you the standard $500 deductible comprehensive policy, they often promote a higher deductible as a way to sell their policies. In addition, if the company offers a higher deductible, it will pay out far less in claims. For example, if you are offered a $750 deductible and you have an $800 claim, the company is out only $50. However, if you have the standard $500 deductible, the company would have to pay you $300.
  • Warning

    Unfortunately, the more comprehensive claims you make, the greater the chance your premium will rise. While insurance companies have varying opinions as to excessive claims, you stand a good chance of paying a higher premium in the future for your automobile insurance. If you make excessive comprehensive claims, you may even find it difficult to switch to another insurance company when your premium rates go up.
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