Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 19, 2021

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The average consumer is faced with a flurry of unknown insurance terms when shopping for car insurance.

And comprehensive car insurance coverage probably tops the list of unknown, but very important insurance options.

So, what is “comprehensive car insurance” anyway? Well, let’s break it down to better understand what we’re looking at here.

Two Main Components of Car Insurance

First off, it’s important to understand that there are two basic components of car insurance coverage available.

There is the mandatory portion, known as liability car insurance, which is coverage for bodily injury and property damage you cause to OTHER people and their vehicles.

Then there’s physical damage insurance, which covers you for damage you may cause to your OWN vehicle.

Comprehensive coverage fits into the physical damage portion because it’s insurance that protects your automobile.

Note: If your car is damaged as a result of another driver causing an accident, THEIR liability coverage would pay for the repairs.

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Comprehensive Coverage Unmasked

When it comes down to it, there are plenty of ways to damage your car.

And many of them have absolutely nothing to do with being involved in an accident (collision).

Cars can be totaled by hailstorms, tornadoes, floods, or simply get damaged while being broken into.

Let’s call it, “things that can damage your car while it’s not moving.”

The one caveat to this explanation is damage caused to your car when colliding with an animal.

For whatever reason, insurance companies decided a long time ago to categorize a “collision” with an animal as a comprehensive “loss.”

If that’s confusing for you, read up on deer insurance for clarification. Hey, we don’t make the rules, we just write about them.

Anyway, comprehensive car insurance is designed to indemnify you for any of the losses described above and almost any other damage you suffer other than being involved in a collision with another car or object.

And collision coverage, which is the other portion of physical damage coverage, is for, you guessed it, collisions!

Comprehensive Car Insurance Example

A good way to distinguish these two similar sounding coverage types is via example.

Say your car is parked on a tree-lined street and one falls and smashes your vehicle. It happens, a lot.

Your comprehensive coverage would kick in.

But if you were driving down the very same street, swerved, and crashed into one of those same trees, your collision coverage would apply.

So as you can see, both types of coverage are pretty darn important and exclusive to one another.

[See: Collision vs. Comprehensive Coverage for more on the subject.]

Do I Need Comprehensive Car Insurance?

Maybe…maybe not. One thing is for sure. If you are leasing your ride or have an outstanding car loan, your finance company will demand you purchase this coverage. So that’s an easy answer.

Don’t owe any money on your chariot? Great, the choice to buy comprehensive coverage is yours.

Whether or not you buy comprehensive car insurance depends on the current value of your car and your willingness to pay the insurance premium to carry it.

If your car is beat up or virtually worthless (to anyone but you), comprehensive insurance may not be worth the cost.

This coverage only pays for the cost to repair or replace your car…whichever is less.

Once your deductible is factored into your claim, you may not get very much money from your insurer when filing a comprehensive claim if your car isn’t worth a whole lot.

Or worse, your car may be deemed “totaled” if the repairs cost more than the car is worth…according to the insurer, not your opinion.

Tip: Even if your car is paid off, you’ll probably still want comprehensive coverage to protect yourself against damage to your car if it’s valuable enough…ask anyone whose ever been caught in a hailstorm that practically demolishes their car.

[Should I buy collision coverage on an older car?]

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What Comprehensive Car Insurance Covers

– Fire
– Lightning
– Wind
– Hail
– Flood
– Explosion
– Smoke
– Vandalism
– Theft
– Animal Collision
– Falling Objects

And much more…so if you’re wondering if comprehensive car insurance coverage is important or not, now you know.

Just keep in mind that not ever auto insurance policy covers the same stuff, so be sure to speak with your insurance company and/or insurance agent to determine exactly how your vehicle is covered.