Ever had your car burned by an electrical fire, dented in a mishap with a large animal or even stolen? These are just a few situations when having comprehensive car insurance coverage could come in handy.
Comprehensive insurance pays for damage to your vehicle on covered costs that aren’t caused by a collision. And there’s a pretty long list of things that can damage your car that don’t result from an accident, such as:
• Falling or flying objects.
Comprehensive is typically part of a car insurance package that also includes collision and liability. Collision pays for damage that occurs in an actual collision when you’re at fault, and liability protects you from the risk of getting sued.
Who should have comprehensive insurance?
Comprehensive car insurance isn’t required by law; however, an auto financing or leasing company may require you to have it. If your vehicle is fully paid for, you’ll need to decide whether to buy comprehensive and how much coverage is enough.
If you don’t have enough savings to replace your car if it’s destroyed, it’s important to have comprehensive coverage. But if repairing or replacing your vehicle wouldn’t be a financial hardship, then you might not need it.
Additionally, if your car is valued at less than $1,000, comprehensive might not be worth the cost. That’s because the total amount you’d receive from a claim likely will be less than your premium. The maximum amount you can receive from a comprehensive claim payout is the actual cash value of your vehicle at the time of damage. How much comprehensive insurance costs depends on several factors, such as your age, geographic location, claims history and car value. But the average annual cost is just $132, according to the National Association of Insurance Commissioners.
Your deductible — or the amount you agree to pay when you file a claim — is another major factor. Common deductibles are $200, $500 and $1,000, and the higher you go, the lower your overall premium will be.
However, choosing a higher deductible could come at a cost. Always be realistic about how much you can pay out of pocket if you have an unexpected claim, and adjust your deductible accordingly.