What exactly is Comprehensive Coverage?

driving-car-coverageI attended an insurance briefing by my insurance provider recently and learned quite a number of things about what exactly comprises comprehensive coverage, as far as insurance is concerned. The discussion about comprehensive insurance cover drew a lot interest from the participants because there seemed to a lack of consensus on the use of the term comprehensive. Some felt that insurance companies use the term comprehensive coverage as a marketing ploy to make potential insurance providers to imagine a possibility of eliminating all the risks they hope to insure against.

The insurance executive who was leading the plenary had a lot of hard time explaining what is comprehensive coverage is all about. I managed to jot down some notes which I revisit in this article. One thing our insurance guy was specific about the term comprehensive cover refers to the most detailed auto cover that is available in the market. He was emphatic that the term comprehensive cover does not denote a special ability to mitigate your auto insurance risk, subject to conditions set out in the policy. In other words, the comprehensive cover can only cover the occurrence of stated risks up to a given maximum extent.

This, according to the insurance executive, works as follows: the minimum auto insurance cover, accepted by law for an automobile to be on the road, is the third party auto insurance cover. In this case the registered automobile owner displaces the risk that may arise from the use of his/ her automobile. However, being only the barest form of auto insurance, the third party does not provide protection to the owner and his/ her interests. In other words the owner is left, alone, to assume his risk exposure. Anyone else who suffers loss, save the owner, is however eligible for compensation.

The third party auto insurance cover moves a notch high when it becomes: third party fire and theft. This, according to the insurance executive, covers the third party (described above) plus the risk of loss to the owner that arises from the automobile being stolen or destroyed by fire. In other words the owners’ interests are included to include two other specific risks: fire and theft. This is therefore, as the explanation was put to us: more comprehensive auto insurance cover than the third party. However, all other risks are not covered, and the name adopted for this auto insurance cover clearly indicates this: ‘Third party auto insurance, Fire and Theft. Period.

The third form of auto insurance is the comprehensive insurance. So, what is comprehensive auto insurance coverage? Our insurance executive managed to impress us on this. He explained that comprehensive auto insurance cover, unlike the other two auto insurance covers, integrates losses suffered by the owner in respect to his/ her automobile. This, therefore, implies that the owner will get compensated for loss or damage to his or her vehicle. Note that these losses are not limited to fire and theft only. Rather the comprehensive auto insurance will reimburse for owner’s interests as far as his/ her automobile is concerned, up to the extent of coverage.