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If you’re shopping for auto insurance, you may be wondering whether you need to add comprehensive insurance to your auto coverage. Or perhaps you’ve recently financed a car and your auto loan lender requires you to get it.
Comprehensive insurance can provide peace of mind — it can help cover certain repairs or replacement of your vehicle after a noncollision event that doesn’t involve another driver. It’s usually optional coverage, unless you lease or finance a car. If you do, your lender may require you to buy it.
Let’s take a look at what comprehensive insurance covers and when it might make sense to buy this coverage.
What does comprehensive car insurance cover?
Comprehensive insurance helps cover vehicle repair costs or replacement after a noncollision event that doesn’t involve another driver, though the extent of comprehensive coverage may vary by policy. Here are some situations where comprehensive insurance could come into play.
- Theft-related damage or vandalism to your car
- Damage from a natural disaster like a flood, fire or hailstorm
- Damage from an animal
- Damage from a falling object
Comprehensive insurance can help fill in certain coverage gaps on your policy. For example, it’s likely that your state requires you to have liability insurance. But liability insurance only helps cover damage you cause to another person’s property in a collision — it doesn’t cover damage to your own car.
How comprehensive insurance works
When you buy comprehensive coverage, you choose the deductible, which is what you’d pay out of pocket after you submit an insurance claim and it’s approved. Common deductible amounts are $250, $500 and $1,000. Comprehensive insurance typically comes with a coverage limit — the maximum your insurance company will pay on an approved claim. The coverage limit is usually equal to the actual cash value, or fair market value, of your car.How to file a car insurance claim
If the cost to repair your car would be greater than the car’s value or if the car can’t be safely repaired, your insurance company adjuster may declare your vehicle a total loss.
In the case of a total loss, the insurance company might provide you with the actual cash value of the car, minus your deductible.
If your vehicle is stolen, you may receive either the actual cash value or the replacement cost value of the car, depending on your policy. With a replacement cost value policy, your insurance company may pay you for the cost of a new car that’s the same make and model as the stolen car.
Keep in mind that coverage, deductibles and coverage limits vary by auto insurance company. Shop around and get a few auto insurance policy quotes that include comprehensive coverage before choosing a policy that works for you.
What’s the difference between comprehensive and collision insurance?
Like comprehensive insurance, collision insurance is usually optional unless you lease or finance your vehicle. But collision insurance offers very different protection from comprehensive insurance.
While comprehensive insurance covers noncollision events, collision coverage helps pay for vehicle repairs or replacement after your car has been damaged in a collision. This can include an accident with another car, a single-car accident such as a rollover, or a collision with a stationary object like a fence.
Similar to comprehensive insurance, collision insurance typically provides coverage up to the car’s actual cash value.
Is comprehensive coverage worth it?
If you finance or lease your car, comprehensive coverage will likely be mandatory. But if your car is paid off, you’ll need to decide whether it makes sense for you to buy this optional coverage.
When comprehensive insurance might make sense
Comprehensive coverage may be a worthwhile investment if you have a newer car and want to help protect your finances in case of theft or damage. Consider whether you could afford to pay for expensive repairs to your car or replace it. If not, comprehensive coverage may be worth the cost for you.
When comprehensive insurance might not make sense
If you have an older car with a low fair market value, you might consider skipping comprehensive coverage and lowering your car insurance premium.
To help you decide whether comprehensive coverage would make sense for you, look up the estimated market value of your car. Edmunds or Kelley Blue Book both offer online tools to estimate your car’s fair market value. The Insurance Information Institute (an organization made up of insurance industry members that’s dedicated to educating people on insurance) says that comprehensive coverage may not be worth the cost if your car’s estimated value is less than your auto insurance premium multiplied by 10.
If you’re working with an insurance agent, they can also help you determine whether comprehensive insurance makes sense for you.
Comprehensive insurance could be a worthwhile investment, especially if you have a newer car with a high market value and want to protect your finances in the event of vandalism, a natural disaster, theft or contact with an animal.
Remember that it pays to do research before choosing an auto insurance policy. Shop around and compare auto insurance quotes to find the policy that best fits your needs. And once you purchase insurance coverage, be sure to shop regularly to help make sure you’re still getting the best deal for you.