Leah Grubb, 24, bought her first car in 2017, just a week after getting her driver’s license.
“I never needed a car in high school or college, and I didn’t want to pay insurance for a car I wasn’t driving,” she said.
But when the time came to take the plunge into car ownership, she had a lot of questions about insurance. “First I asked my parents what I should do,” she recalls. “Then I asked Google.”
For a brand new driver with a newly financed car, the experience of comparing coverage and rates was overwhelming, Grubb said. She ended up basing her first insurance purchase on cost, she admits now. `
But a bit more knowledge about the different types of car insurance may have helped her choose a policy more confidently.
A new driver or anyone taking a closer look at their policy may focus on liability coverage. After all, every state requires you to have some level of liability insurance, so you probably hear about it more often. But what about coverage beyond injuries and damage that occur due to an accident?
What about all the things that can happen to your car while it’s parked? (And there are so many things that could happen.)
That’s where comprehensive insurance comes in handy.
What does comprehensive insurance cover?
Comprehensive insurance reimburses you for damage to your car that wasn’t caused by a collision of any sort.
Think of it as anything that could happen to your car while it’s parked:
- Accidents with animals, such as hitting a deer
- Falling objects, such as trees, branches, ice
- Windshield cracks or chips
Most comprehensive policies do not cover items that aren’t installed in the car.
For instance, if your window was smashed and your cell phone was stolen from the cupholder where you left by mistake last night (whoops), you would likely be covered for the window repair, but not for the cost of the phone.
Any stolen items from inside the car is covered under homeowners or renters insurance.
Comprehensive insurance vs. collision insurance
If comprehensive insurance covers most damage to your car when it’s parked, think of collision insurance as the protection for what might happen while you’re on the road.
If you get in a crash with another car, ding your fender from a pothole or road construction, or back into your neighbor’s mailbox, that damage is covered under collision.
Like collision coverage, comprehensive insurance isn’t mandatory. But you’ll often find them packaged together by car insurance providers.
If you see “full coverage” listed, it’s not some special top-tier coverage. It’s just a term insurance providers use for policies that cover liability, collision, and comprehensive damage.
What does comprehensive insurance cost?
Comprehensive coverage will pay for damages up your car’s actual cash value (ACV). Actual cash value is the purchase price of your car minus depreciation and your deductible. So your comprehensive coverage will pay an amount up to the ACV of your car to either repair or replace it (if it’s declared a total loss).
The average comprehensive coverage premium in 2016 was $153. In comparison, the average annual collision premium that same year was $342.
Your deductible will be the same for your entire policy, not just your comprehensive coverage. Deductibles typically range from $100 to $2,000, meaning you’ll pay that amount for repairs before your coverage kicks in.
Do I need comprehensive insurance?
If your car spends more time in park than on the road, comprehensive coverage may be worth it for you. Around 78 percent of drivers have comprehensive insurance. It may be something worth considering if you have a newer or more valuable car.
If you don’t opt for comprehensive insurance, you’ll want to have enough cash on hand in the event you need to pay for repairs that the insurance would have covered.
Two years after buying her car, Grubb has taken two cross-country trips in it and lived in two states. Now based in the Philadelphia suburbs, she works from home and only uses her car to run errands. She checks her coverage every six months to make sure it’s still working for her lifestyle, and she has found a few other hacks for protecting her car beyond insurance.
“It snows and there are potholes everywhere,” Grubb, who previously lived in Florida, noted. If her boyfriend drives when they go out, his big truck skips right over the potholes, she said. “My little car plops right into [a pothole] and makes itself at home.”
What to consider before you buy comprehensive insurance
Since comprehensive insurance isn’t always required, it’s important to consider a few factors before you pay that premium:
1. Are you still paying for your car?
If your car is financed, your lender will most likely require that you carry both collision and comprehensive coverage.
2. How old is your car?
Not sure how your car is still running for all the miles it’s racked up? Have you been driving the same car since you were sixteen? If your car isn’t worth a lot, it may not make sense for you to have comprehensive insurance.
Say a tree falls on your 12-year-old car and totals it. The compensation you’ll get from your insurer will match the current value, which means you won’t be able to get a newer, pricier car with that check. If you don’t have enough cash saved, you might end up at the clearance end of the used car lot.
If you’re not sure what your car is worth, check out Kelley Blue Book or Edmunds’ used car appraiser.
A good rule of thumb is that if your comprehensive insurance premium costs more than 10% of the value of your car, it’s not worth keeping the coverage.
For instance, if your comprehensive coverage for the year cost $153, but your car’s value is only $1200, you’d probably be better off saving that cash in the event you need to repair or replace your car.
On the other hand, if you have a brand new car, you can also consider buying new car replacement to add on to your car insurance policy.
This type of coverage eases the financial burden of having to replace a brand new car (usually two years or newer) that’s been totaled.
The insurer will give you the money for the brand new car of the same make and model and not for the depreciated value of your car. But the reimbursement doesn’t include the deductible.
3. Where do you live? Where do you park your car?
If you live or work in a dense urban area, your car may be at increased risk for vandalism or theft. If you park on the street, your car may be more at risk than if you parked in a garage at home.
These risks can make your comprehensive coverage more expensive, but those same risks may convince you to purchase this additional coverage.
It also depends on how high-risk your area is for natural disasters. A flood can easily total a car and you would be covered for repairs or replacement through comprehensive insurance.
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