Comprehensive coverage in an auto insurance policy is also referred to as OTC(other than collision) coverage. The name of this coverage policy makes its definition more clear because it covers almost all other physical damage that can occur to a vehicle other than collision. This coverage is the most superior kind of protection you can provide your car with. Collision refers to the damage suffered by the vehicle when the vehicle is in motion. This damage may be caused by an object or other vehicle in a road accident. It does not matter who is at fault in the accident that damages the insured vehicle; the owner of the insured vehicle can make a claim under collision coverage.

On the other hand, OTC coverage protects the vehicle from perils other than collision. Losses include damages that are not limited to fire, theft or larceny, explosion or earthquake, vandalism, glass damage, damage from hitting an animal, floods, and weather-related damage.

Similar to collision coverage, an individual has to select an OTC Coverage deductible while buying an Auto Insurance Policy. In this blog, we will discuss the deduction and limits in comprehensive coverage of auto insurance policy.

What do comprehensive coverage deductibles mean?

A car insurance deductible is an amount that you have to pay toward repairs or other damages before your insurance policy kicks in. For example, a policyholder chooses a $1000 comprehensive coverage deductible. Later, his/her car gets damaged in a hailstorm, and the loss is considered under comprehensive coverage. If it costs $2,500 to repair the car, the insured has to pay his/her $1000 deductible, and the insurance company pays the remaining $1,500.

The comprehensive deductible is a little different from the collision deductible. In almost any comprehensive coverage claim, the insured is responsible for the deductible. This is because comprehensive claims are of a different nature; there is no other driver and thus no other insurance company involved. A comprehensive claim is generally filed for loss from vandalism, theft, fire, or any other source that is not a collision.

Most of the drivers sometimes feel that they should not pay a deductible in a situation where they were not in any way responsible for the damage to the car, as is often the case in comprehensive claims. The use of the deductible system is one of the methods through which car insurance companies keep the rates of insurance premiums lower for everyone. It also lowers the impact of such claims and also makes people not file small claims that take more resources to process than they are worth.

How to choose your comprehensive coverage deductible?

The most important thing to consider when choosing a comprehensive coverage deductible is that an individual must think about how much he/she has to prepare to pay out of pocket if the claim is required after an incident. That means an insured has to find the right balance between what fits the budget for insurance and what he/she can reasonably expect to be able to afford in the case of a comprehensive claim.

It should always be remembered that if you choose a higher deductible in the account for lower premiums and don’t have a claim for many years, the money you saved over that span can put you ahead of the game. On the other hand, if a claim is required during the policy period, you must be able to handle the out of pocket amount.

Typically comprehensive deductibles range varies from $100 to $2,500. As car insurance deductible, choices vary depending on the state laws and the guidelines of insurers.

Comprehensive insurance coverage limits

Comprehensive coverage is similar to most insurance policies, subject to limits. The coverage limit is the maximum amount that an insurance policy pays toward a covered claim. The limit on comprehensive coverage is typically the actual cash value of the vehicle(original value of the vehicle minus depreciation). It can be better understood by the following example:

Suppose, your car is stolen. Your car insurance company would reimburse you for your car’s depreciated value, minus the deductible that you selected at the time of purchasing the insurance policy. In other words, if you want to replace your stolen vehicle with a newer one, you would likely have to use some of your own money to do so, in addition to using the reimbursement from your insurance company.