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Comprehensive Car Insurance Demystified

For every driver shopping around for auto insurance coverage, there are many choices to make when it comes time to put a policy together. All drivers in most states have to carry auto liability coverage, but beyond that there are several forms of coverage which are largely elective in nature. Having a good understanding of the cost of these elective forms as well as a working knowledge of the specific role each part plays in your overall package of car insurance can help you to decide which ones to include and which to leave out.

Comprehensive auto insurance is an important coverage option available for drivers. Though it is not required by any of the states mandating auto insurance, it is required by lien holders to protect their interests in vehicles being financed or leased. Thus, it is an insurance type you must have if you are a lessee or if your car is financed, until the loan is paid off or the leased vehicle returned. This is something to think about for drivers thinking about leasing, as a matter of fact. Along with collision coverage, you will always have to carry comprehensive as long as you lease. This extra added expense should be factored in to any leasing decision.

In terms of the protection it provides to the policy holder, comprehensive coverage picks up where collision insurance leaves off. While collision insurance is strictly designed to take care of losses sustained in an auto accident, comprehensive deals with damage sustained in any other covered circumstance. For example, if your car is damaged by a flood or a fire while it is parked in your garage, your comprehensive coverage will cover your loss, less your chosen deductible.

Comprehensive car insurance covers a wide range of circumstances, so it is a very useful and valuable form of coverage worth carrying on many cars. If your car is stolen and is recovered, any damage done to it during the theft will be covered by comprehensive; if it is dented or otherwise harmed in a storm, by animals or an act of vandalism, your next step is to file a claim on the comprehensive portion of your policy.

Comprehensive Coverage Limitations and Exclusions

But contrary to its name, comprehensive insurance does not cover every occurrence under the sun. For example, it will not cover malicious harm done to the vehicle by the policy holder. You can get into legal trouble and face other potential consequences if you try to file a fraudulent claim after purposely harming your own car. It is simply not worth the hassle or the risk to try to make this kind of claim.

Another exclusion of most comprehensive policies is in circumstances where your vehicle is broken into. Your coverage will reimburse you for the damage to the covered vehicle, but usually not for loss of personal property that might have been stolen during the break-in. In many cases, this kind of loss is the domain of renters or homeowners insurance policies, depending on where the car was parked at the time of the break-in. There may be other exclusions and limitations to your coverage as stated in the language of your specific policy. Always check the language of any car insurance policy to be sure you understand any of these limitations before you make a policy purchase. Make sure you know what you are paying for.

Comprehensive Not for Every Driver

Though comprehensive coverage is a very useful form of auto insurance protection, it may not be appropriate in all cases. Each individual circumstance is different, just as every car is different. If you have a car with a lien on it, obviously you will need to carry comprehensive as well as collision coverage. If you own a car outright but it is still in good condition and worth quite a bit of money, it is definitely wise to keep your comprehensive coverage in place.

But if your vehicle is older and it is not worth much money, buying comprehensive insurance coverage probably will not represent a good investment for your vehicle. The reason the value of the vehicle is so closely tied to the wisdom of deciding whether to buy comprehensive coverage is that the limits of your coverage are usually the actual cash value of the car. Therefore, it does not make a whole lot of sense to spend a few hundred dollars a year carrying this kind of coverage on a car that is not worth much more than the insurance premium. This is also true of collision coverage, which usually only pays out up to the actual value of the vehicle after an accident.

With all that being said, this does not diminish the value of comprehensive auto insurance protection. It just narrows the scope of situations in which adding comprehensive makes sense to the policy holder. Just like with any available coverage endorsement, you greatly benefit from gaining an understanding of comprehensive coverage-what it covers, what it does not cover and the limits of coverage as they apply to your specific vehicle. A $500 pickup truck probably does not warrant taking out a comprehensive policy; but a classic old pickup you only take out to car shows in the summer certainly does.

Keeping Down Comprehensive Premiums

Aside from the characteristics of the specific vehicle being insured, another obvious factor all of us have to take into consideration when putting together our auto policies is the cost of coverage. Comprehensive insurance can add a few hundred dollars per year to the cost of your policy-more if your car is worth a lot of money or replacement parts are hard to come by. If you are on the fence about whether you can really afford to add comprehensive coverage to your policy, or if all you can manage is basic auto liability, it is easy enough to run the numbers both ways. Get some quotes from qualified auto insurance providers and find out in concrete terms how much extra it would cost you to add comprehensive.

But if at first the prices come back higher than you had hoped, do not lose heart. There are certainly some ways to lower the cost of carrying comprehensive car insurance. The first and definitely the easiest way to lower your premium is to raise the coverage deductible. Most insurers will provide you with a quote based on a default deductible. In many cases this may be $500 or somewhere in that neighborhood. You can get a policy with a lower deductible than this, or you can opt for a higher deductible to save more money. Raising the comprehensive deductible on your auto insurance from $500 to $1,000, for example, may save you enough money off your annual premium to make the coverage more affordable for you. Just keep in mind that the deductible represents the out-of-pocket cost you will face each time you make a claim. A high deductible limits your ability to file claims on smaller losses.

Comprehensive auto insurance is useful and valuable, and knowing more about it can help you decide whether to include it in your policy.

 

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