Liability Insurance
June 7, 2021Collision Insurance
June 9, 2021
Car insurance coverage that is comprehensive
Auto insurance consists of several types of coverage, some of which are required by law and some of which are optional.
Comprehensive insurance is one type of optional coverage that pays for damages to your car caused by incidents other than collisions (collision insurance is for that).
Leaseholders and people who finance their cars are generally required to have comprehensive coverage, but do you need comprehensive auto insurance for everyone else?
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What does comprehensive auto insurance cover?
If your car is damaged or destroyed in an event that is not a collision, comprehensive insurance will pay to repair or replace it. This includes theft, vandalism, fire, natural disasters (such as tornadoes, hurricanes, earthquakes, and floods), falling objects (such as hail or a tree falling on your car), and animal damage (such as colliding with a deer or being invaded by ravenous woodchucks). Some insurance companies in some states sell collision and comprehensive coverage as a package deal (see below). Others regard them as two distinct products. In the event that your car is a total loss, comprehensive pays the actual cash value, which is the replacement cost less depreciation. Many people estimate the actual cash value of their vehicles using the Kelley Blue Book, though your insurance company will have its own estimate.
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Comprehensive car insurance vs. other types of insurance
There are several types of coverage in auto insurance. Here's what the other types of insurance cover, and how comprehensive it is in comparison:
Collision insurance — Covers the cost of repairing or replacing your vehicle if it is totaled in a collision with another vehicle or in a single-car accident (like you hit a tree). Pays actual cash value, just like comprehensive. It is optional.
Liability insurance includes two types of coverage: bodily injury liability (BIL) and property damage liability (PDL) Liability insurance covers the costs of people you injure while driving your car. Property damage liability (PDL) pays to repair or replace other people's vehicles while bodily injury liability (BIL) pays for their medical expenses. It is necessary (in states that require insurance).
Personal Injury Protection (PIP)- If you or your passengers are injured in a car accident, regardless of fault, this insurance can help cover some of the costs, such as medical bills and lost wages. Many people with adequate health insurance choose to forego or purchase only the bare minimum of personal injury protection. It is occasionally necessary (in states that require insurance).
Uninsured/underinsured motorist coverage (UM/UIM) When a driver hits you, you can usually file a claim with their insurance company and be compensated through their liability coverage. However, if that coverage is insufficient to cover your expenses, or if you are hit by an uninsured or hit-and-run driver, uninsured/underinsured motorist coverage pays the difference. It is occasionally necessary (in states that require insurance).
Gap Insurance - If you financing your vehicle, and the total or stolen value of that vehicle is, the insurance gaps pay the bank to the amount you owe the bank for it and the amount you owe the vehicle. Facilitated.
Who requires full-coverage auto insurance?
Everyone who owns a car and wants to be completely risk-free requires comprehensive insurance, but there are some groups for whom it is mandatory:
1. People who lease or finance their automobiles Many lenders require people who lease or finance a car to have collision and comprehensive insurance.
2. People who are unable to purchase a new car If you own your car outright, you may believe you can avoid purchasing comprehensive insurance. Consider this: if your car was stolen or destroyed in a flash flood or fire, would you be able to afford to replace it? Some people have emergency funds or savings set aside for this purpose, so the answer is yes. For others, the loss of a car may be an unfathomable blow. Comprehensive insurance coverage provides critical protection for the second group.
3. People are concerned about natural disasters. If you live in an area prone to flooding, earthquakes, or other natural disasters, comprehensive insurance is the only way to protect yourself in the event that your car is destroyed. Your homeowners insurance will not cover it if it is in your garage or on your property.
How much does comprehensive auto insurance cost?
The cost of comprehensive insurance coverage varies greatly depending on location, but the national average annual premium for comprehensive coverage is $148 ($12 per month). Washington, D.C. has the highest cost for comprehensive coverage, at $233 per year ($19 per month). Maine is the most affordable state, with an average annual cost of $104 ($9 per month).
The cost of comprehensive car insurance can be complicated because many carriers sell comprehensive and collision coverage bundled together, and you may not be able to simply price out comprehensive.
This table shows the cost of liability coverage, collision coverage, comprehensive coverage, and total (combined) coverage in each state (note that the premiums listed are yearly premiums, not monthly).
Is it worthwhile to purchase comprehensive auto insurance?
Comprehensive insurance can be invaluable if you do not have a reserve fund to replace your car if it is destroyed or stolen. There is one exception: if the value of your car is less than the premiums you are paying.