Comprehensive Car Insurance: How It Works and Why You Need It
What is comprehensive car insurance?
Comprehensive car insurance is optional auto insurance coverage that pays to repair or replace your vehicle if it’s stolen or damaged by something other than a collision. Comprehensive insurance will cover up to the actual cash value of your car.
Comprehensive coverage isn’t required by law, but if you have an auto loan or lease, your lender likely requires you to carry it, along with collision insurance. In Canada, a “full coverage” auto insurance policy includes comprehensive, collision, and liability insurance.
The term “comprehensive insurance” may sound like a policy that covers everything, but in the world of auto insurance, “comprehensive” just refers to the portion of your policy that covers damage to your car from non-collision causes.
Be sure that you don’t confuse “comprehensive insurance” with full-coverage auto insurance. This is an informal term that’s often used in the industry to describe a vehicle insurance policy that includes liability coverage, collision insurance, and comprehensive coverage.
What does comprehensive car insurance cover?
Comprehensive car insurance covers non-collision damage or loss to your insured vehicle. Here are some causes of loss (also called perils) that comprehensive insurance typically covers:
Glass and windshield damage from a covered peril is typically included in comprehensive insurance, but you may have the option to exclude this coverage. Check your car insurance policy for a detailed explanation of everything that’s included in this coverage, as well as any exclusions that apply specifically to your coverage.
Unlike liability coverage, which has a specific coverage limit that you choose, comprehensive simply covers up to the total cash value of your vehicle—that is, its replacement cost minus depreciation. It’s also subject to a deductible, which will reduce your final insurance payout by the amount you choose when you purchase the policy.
What does comprehensive insurance not cover?
Comprehensive car insurance coverage does not cover:
- Theft by a household member or employee
- Any medical expenses
- Repair costs for anything other than the insured vehicle
- Collision-related damage, except for a collision with an animal
Comprehensive insurance doesn’t cover pothole damage. You might think that comprehensive insurance covers damage from hitting a pothole, but this is a common misconception. Hitting a pothole is considered a single-car collision in insurance terms, so this type of damage is covered by collision insurance.
Comprehensive vs. collision insurance: What’s the difference?
Comprehensive and collision coverage are often paired, since together they can cover your vehicle against a wide range of perils.
The difference is fairly simple:
- Collision coverage pays for repairs if your insured vehicle is damaged in a collision
- Comprehensive coverage pays for repairs if your insured vehicle is damaged by something other than a collision, such as severe weather or theft
In Ontario, direct compensation property damage (DCPD) coverage is a standard component of all car insurance plans. This coverage helps to pay for repairs to your vehicle if it’s damaged in a collision where you were less than 100% at fault.
When purchased together, comprehensive and collision insurance combine with mandatory coverage like third-party liability to give you what insurance companies often call a “full-coverage policy.” Lenders usually require full coverage if you have an active loan or lease on your vehicle, and it’s generally a good idea to maintain this coverage even after your loan is paid off unless you can afford to replace the car out of pocket.
All perils vs. comprehensive car insurance
All perils car insurance essentially combines comprehensive and collision insurance with a single deductible, and extends additional coverage for one peril not covered by comprehensive insurance: theft of your vehicle by a household member or employee. All perils is not the same as comprehensive insurance since it includes collision coverage and additional theft coverage.
All perils coverage isn’t always included in online auto insurance quotes, so you may need to speak with an insurance broker if you want to upgrade to this coverage.
You may have the option to choose what’s known as “specified perils” coverage to complement your collision insurance. Specified perils is essentially a limited version of comprehensive coverage. It only covers perils listed in your policy and typically excludes coverage for:
- Vandalism
- Falling Objects
- Glass or windshield damage
- Damage caused by animals
Is comprehensive car insurance mandatory in Canada?
Comprehensive car insurance isn’t mandatory in most of Canada. While Manitoba and Saskatchewan both require residents to carry comprehensive insurance as part of their public auto insurance programs, it’s optional coverage in all other provinces and territories.
That said, if you have an active auto loan or lease, the terms of your lender contract likely require you to purchase and maintain comprehensive and collision coverage until you’ve paid off your loan in full.
Don’t ignore lender requirements. Not only is the lender likely to discover that the coverage is no longer active, but they may purchase “force-placed” or “lender-placed” coverage on your behalf and pass the cost—which is often considerable—on to you.
Is comprehensive insurance worth it?
For most Canadians who rely on their vehicles for daily life, comprehensive insurance is worth it and can save you tens of thousands of dollars in the event of a serious loss.
When comprehensive insurance stops making sense
Comprehensive insurance may no longer be worth it if you’ve paid off your vehicle in full and its actual cash value is lower than the cost of comprehensive coverage.
To evaluate whether it’s worth keeping comprehensive coverage on your policy, do some quick math:
- Estimate your vehicle’s current cash value using an appraisal tool like Kelley Blue Book.
- Check your current policy or online auto insurance quote for the portion of your car insurance premium that covers comprehensive insurance.
- Multiply that number by 12 to get the total cost of comprehensive insurance for one year and compare it with your car’s estimated value.
For an older vehicle, the cost of comprehensive insurance may be $15–40/month, or between $180 and $480 per year. Because most vehicles are worth more than that, it’s probably worth paying for comprehensive insurance even if you own your car outright.
How comprehensive coverage affects your premium
Comprehensive car insurance costs $200–$500 per year in Ontario, on average. For most Canadians, this coverage represents a fairly small portion of their overall car insurance cost.
The exact cost of comprehensive insurance depends on your location, the type of vehicle you drive, and the estimated value of your insured car. Vehicle owners in areas with high rates of car theft may pay higher rates for comprehensive insurance, as will those in regions that see frequent severe storms. You’ll also pay more or less based on the overall value of your vehicle and the rate of comprehensive claims associated with that model.
You can adjust the cost of comprehensive insurance slightly by raising or lowering your deductible amount. A lower deductible, such as $250 or $500, will raise the cost of comprehensive coverage while making it more affordable to file a comprehensive claim. A higher deductible, on the other hand, means lower premiums, but you’ll need to pay a larger portion of your total costs if you need to make an insurance claim.
How to compare comprehensive car insurance options
Comprehensive coverage is a standard option from all car insurance companies in Ontario, but pricing, details, and deductible options may vary.
- Request multiple quotes: Get car insurance quotes that include comprehensive coverage from at least three insurance providers so you can compare your options.
- Read the fine print: Take a close look at the details of each coverage offer, including the perils covered by comprehensive insurance and any exclusions that may apply.
- Consider add-ons: If your policy includes collision and comprehensive insurance, you may be able to add certain endorsements, such as loss of use coverage.
When you request online quotes for car insurance from PolicyMe, you’ll be able to speak with a licensed insurance advisor who can help you review and understand your coverage options, evaluate your overall financial situation, and make informed decisions about risk and cost.
FAQ: Comprehensive car insurance
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.