Comprehensive Insurance: 3 Things to Know

comprehensive insurance

Insurance clients have real concerns. What better way to address those concerns but through letters.

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Dear Comprehensive Insurance Seeker,

Are you wondering if you should purchase comprehensive insurance for your vehicle? What if you already carry collision insurance? And what exactly is the difference? Is it worth it?

Let’s dig into these questions so you can decide if adding comprehensive insurance to your plan is a smart idea or not.

First, what is comprehensive insurance, and how does it differ from collision insurance?

Comprehensive insurance is a fallback for when something goes wrong that’s not related to a collision. This type of insurance covers things like damage from vandalism, a tree branch falling onto your car, or other situations like a fire.

Your collision insurance kicks in if you’re in an auto accident such as hitting another car, maybe a fence, or you’re in a roll-over. But what happens if a hail storm blows through town and dings up your hood? Your collision coverage isn’t going to help. In this instance, if you have comprehensive insurance you’d be covered. If you opted to go without it, you’re out of luck. What about vehicle theft? Got comprehensive insurance? You’re covered.

Now, some cars with loans still on them don’t allow you the option to go without it, but if you own your car free and clear, this becomes optional. That means, you’re able to lower your insurance costs by dropping this coverage. Here’s the kicker, if something happens, then you’re on your own. At this point, it comes down to weighing your choices to figure out what makes sense, and in this case, dollars and cents.

What does Comprehensive Insurance Cost?

Is comprehensive insurance worth it? We think so, for as much as it covers, but only you know what your financial circumstances are. Let’s figure out what it costs and other details you should know.

Should you go without comprehensive insurance? The first thing to consider is the value of your car, and what it would cost to repair or replace your vehicle. That may play a part in your decision. The second thing to understand is deductibles. Insurance works with levels. Deductibles are how much you pay out of pocket before the insurance company covers the rest. And with deductibles, the more money you are willing to pay out of pocket, the lower your monthly insurance will cost. If you need a low deductible, you’ll pay more monthly. Here’s an example:

You have a $500 out of pocket deductible. Your monthly premium is higher.

You have a $1,000 out of pocket deductible. Your monthly premium is lower. 

But it all balances out. Basically, do you want to put the money out a little bit at a time via premium, or all in one lump sum if something happens to your car? It’s a gamble either way, and neither is the right answer. It’s like asking if you’d rather have pepperoni on your pizza or extra cheese . Same type of product, just different. Knowing what will put less of a strain on your wallet is the bigger thing to consider.

Now, here’s something else to think about. You may have a $1,000 deductible for a lower premium payment, and your car ends up damaged. The damage costs $400. That’s all out of your pocket, because the insurance doesn’t kick in until you’ve spent $1,000. If the damage cost $1,100. You’d pay $1,000, insurance would pay $100. Where it makes sense in this case for a larger deductible is if the value of your vehicle is higher. Imagine your damage will cost $5,000. You’re only responsible for the first $1,000, and the insurance company will pay the remaining $4,000. Sometimes you win sometimes you lose but with comprehensive insurance it’s covered.

What Does Comprehensive Insurance Cover?

• Damage from an animal, example hitting a deer

• Theft of vehicle

• Fire

• Vandalism

• Nature, such as falling branches or flooding

It’s also important to note that this does NOT include medical expenses. Also, a lot of car rental and leasing companies will require that you have comprehensive insurance while leasing from them.

So, is it worth it? Yes, we think comprehensive insurance is something you should consider. Sure, it’s frustrating to have to pay for something up front, but because you can’t predict what will happen, when the moment comes that you need it, you’ll be glad it’s there.

Forever Twisted,

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