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Personal Perspective

Is Comprehensive Coverage for Your Auto a Good Investment?

By March 1, 2014No Comments

Comprehensive Insurance covers your car, truck or van if it sustains physical damage from a theft, vandalism, fire, flood and flying or falling objects. Is this coverage a good investment for you?

You Might Need Collision Insurance Too

Certain insurance companies won’t add comprehensive coverage to your policy unless you also buy collision coverage. However, you can usually purchase collision insurance without comprehensive. Ask your agent for details.

The Lease or Loan Might Require It

If you lease your vehicle or took out a loan to buy it, the dealership or bank probably requires you to purchase comprehensive coverage. They might also mandate the deductible your policy includes. Be sure you understand these requirements when you talk to your insurance agent about coverage for your new vehicle.

Factor in the Deductible

Every insurance policy includes a deductible, the amount of money you pay out-of-pocket when you file a claim. If the deductible for comprehensive coverage is more than you can afford, don’t buy the extra coverage.

However, take into consideration the cost of replacing your vehicle. A flood, for example, could total your vehicle. In that case, paying the $500 to $1,000 deductible for a replacement vehicle is affordable.

Determine the Value of Your Older Vehicle

You’ve probably heard that your older vehicle doesn’t need comprehensive coverage. That’s because it isn’t worth much, and you’ll end up paying more for the premium each month than you would get from the insurance company if your vehicle were damaged.

Before you discount comprehensive coverage for your older vehicle, do your homework and consult Kelly Blue Book, Edmunds or NADAguides to determine your vehicle’s value. If you find out that your older vehicle is worth a decent amount of money, consider adding the optional coverage.

Your decision to purchase comprehensive coverage depends on several factors. Talk to your agent as you determine if the extra coverage makes sense for your budget and insurance needs.