Physical Damage Coverage – Comprehensive

Comprehensive vehicle insurance covers the cost of damage to your car caused by events such as a natural disaster, theft, vandalism, or even in the case of civil unrest, such as a riot. If something falls on your car or you hit an animal, comprehensive insurance will help cover the repair costs. Essentially, comprehensive insurance covers anything not covered by collision insurance.

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If you have a car loan, or you lease your car, then your lender will require that you purchase comprehensive insurance to cover any damages. However, comprehensive insurance is not required under state laws, so if you own your car then it is up to you to decide whether the cost is worth the benefit.

When to buy comprehensive auto insurance

Your insurance will only cover the cost of damages to the vehicle up to the cost of Kelley Blue Book value of the car. Newer car owners usually find it worthwhile to purchase comprehensive insurance, while many people who own older cars find that it is not financially worth their while to pay for this kind of insurance. In fact, comprehensive car insurance – despite its higher cost – is extremely popular. The National Association of Insurance Commissioners found that 77% of drivers nationwide buy comprehensive coverage.

Generally, if the costs for your comprehensive plus collision insurance are more than 10% of the car's value, then you will probably save some money by dropping the insurance coverage. Many cars reach this point at around five years old. However, keep in mind that if you do drop your insurance coverage, then you will have to pay for any repairs on your own. It is always a good idea to keep some savings as a cash cushion in case of such an emergency.

Costs for comprehensive coverage

Insurance costs vary depending on the likelihood of damage to the car. Your insurance carrier will determine your premium based on the age and experience of all the drivers of the vehicle, how many miles you plan to drive during the year, the safety in the area you live in, and the car's value.

You can also control your insurance costs by choosing your deductible. If you choose a higher deductible, then your premium will be lower, but you will have to pay more out-of-pocket for repairs should your car be damaged. For example, if you need $2,500 worth of repairs, and your deductible is $1,000, then you will have to pay the $1,000 deductible before your insurance will cover the remaining $1,500.

See if you can save on comprehensive auto insurance – request a quote here!

Sources
http://www.wisegeek.com/what-is-the-difference-between-collision-and-comprehensive-auto-insurance.htm
http://www.carinsurance.com/CoverageDefinitions.aspx
http://www.smartmoney.com/personal-finance/insurance/how-much-auto-insurance-do-you-need-10731/
http://www.kbb.com/
http://www.thenewstribune.com/business/v-lite/story/482082.html

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Last Updated: November 10, 2009