What Is Comprehensive Auto Insurance, and Do I Need It?

Most states mandate a certain minimum amount of liability insurance in order to own and operate a vehicle. As long as you have that, you’re free to drive when you want. However, what if something else happens to your car besides an accident? For that, you need comprehensive auto insurance. What is comprehensive insurance, and is it worthwhile? Let’s take a look.

What Is Comprehensive Auto Insurance?

Liability insurance covers the damage to the other vehicle if you’re found to be at fault in an accident. Collision coverage takes care of the damage to your own vehicle. But comprehensive insurance covers other types of incidents.

Say your car catches fire. Say a tree branch falls on it. Say someone vandalizes your vehicle, or steals it. Say there’s a flood, earthquake, or other natural disaster. All of those things are covered under comprehensive insurance.

Just about any kind of non-collision damage to your car is covered by comprehensive insurance. There is, however, still a deductible—usually $500 or $1,000. That’s how much of the damages you’re financially responsible for. Anything above and beyond that, your insurance company will pay for.

Comprehensive coverage is sometimes used interchangeably with full coverage. However, they’re not the same thing. Comprehensive insurance doesn’t cover accidents. So in order to have full coverage, you need comprehensive insurance, plus collision insurance—as well as, of course, the liability insurance required by your state.

Do I Need Comprehensive Auto Insurance?

The law doesn’t require any comprehensive insurance on your car, but if you’re leasing or financing your vehicle, then the lender or lessor may require it. If you own your car outright, though, comprehensive coverage is optional. So do you need comprehensive insurance? Is it worth it?

Comprehensive insurance can give you peace of mind, when it comes to your car. It also means higher premiums. The main factor when determining if it’s worthwhile is your car’s current value. If you have an older car that’s not worth very much anymore, then comprehensive insurance may be a waste of money. After the deductible, you might not be left with much. You may even end up paying more than the car is worth.

Here’s how to figure it. Take your car’s current value and subtract the deductible. Then take that number and subtract the amount you pay in a given policy period—generally six months. If you’re paying more than the car is worth, then you should skip the comprehensive coverage.

If there’s a little bit of money left over, then comprehensive insurance can benefit you, but know that you’ll still be on the hook for the bulk of the car’s value, should something happen. On the other hand, if there’s a lot of money left over—or at least more than you’re able to pay out of pocket—then you can definitely benefit from a comprehensive policy.

You never know what’s going to happen in life. Comprehensive insurance is about preparing for those eventualities that you can’t predict. You may never need it. But then again, to be caught without it could be a disaster. Wouldn’t you rather have that peace of mind?

Contact us to learn more about comprehensive insurance!