In order to own and operate a vehicle in Canada, you need to have two types of car insurance: third-party liability insurance and some form of accident benefits. On top of these, however, you’re also able to purchase a number of optional types of coverage, one of which is comprehensive insurance. Here’s a quick look at how comprehensive insurance works, what’s covered, what’s not covered and whether or not you should get it.
What is Comprehensive Insurance?
Where as most of the other types of coverage you can get protect you in the event that you are involved in a motor vehicle accident, comprehensive insurance actually protects your vehicle when it’s been damaged in any other situation, such as theft, fire or vandalism.
For example, if your car was stolen, vandalized, then later found and returned to you, you could make a comprehensive insurance claim with your car insurance company so they would cover the cost of any repairs you needed.
What is Covered by Comprehensive Insurance?
Taking from the example above, comprehensive insurance covers:
- Theft and vandalism
- Weather (e.g. lightning, windstorm, hail, etc.)
- Fire, earthquake, explosion
- Falling or flying objects (e.g. rock or gravel)
Comprehensive insurance not only covers the cost of repairs, but can give you a cash settlement if your car is at a total loss.
What is NOT Covered by Comprehensive Insurance?
Comprehensive insurance does not cover:
- Damage to your car from a collision with another vehicle or object on the road
- Medical expenses or lost income for you or your passengers after an accident
- Damage to another person’s car from a collision
- Medical expenses, lost income or legal fees for another person after an accident
For all of these things, you would need to have collision coverage, third-party liability and/or accident benefits.
Is Comprehensive Insurance Mandatory?
No – comprehensive insurance is optional. However, if you’re in a financial situation where you couldn’t afford to fix or replace your vehicle if it was damaged/lost, you should get comprehensive insurance coverage.
Should I Get Comprehensive Insurance?
If you’re on the fence about buying comprehensive insurance, ask yourself two questions:
- What is the value of your car?
- Could you afford to fix/replace it, if something happened to it?
If your car is older and not worth much (i.e. under $2,000), you may find it’s not worth having a comprehensive insurance policy in place, and decide you’d rather replace it with something newer and safer if something happened to it. As well, if you have the money to fix/replace your car, in the event that something happened to it, you may also find you don’t need comprehensive insurance. Really, it all depends on how much you think your vehicle is worth, and if you have the money to cover any damages yourself or if you want the peace of mind of knowing you’re protected at all times.
How Comprehensive Insurance Claims Work?
Comprehensive insurance claims work a little differently than most other insurance coverage, in that they require you to pay a deductible to make a claim. Deductibles are typically available at $300, $500 and $1,000. The higher the deductible you choose, the lower your car insurance premiums will be, because you’re telling the company that you’d be happy to pay more if something actually happened to your car.
For example, let’s say there was a bad storm and a large tree branch fell on your car while it was parked in your driveway. The total damage done to your vehicle added up to $3,000. If you had a $500 deductible listed in your policy, your insurance company would cover the remaining $2,500 in getting your car repaired as soon as possible.
(Alternatively, if your car was only worth $3,000, you could pay the deductible and get a cash settlement for the rest, to help you buy your next car.)
How to Buy Comprehensive Insurance
When you’re ready to buy a new car insurance policy, you can do so in-person or over the phone, at a bank/credit union, insurance company or insurance brokerage (deals with more than one insurance company). If you haven’t already done so, we always suggest you start by comparing car insurance quotes online.
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