How does comprehensive insurance on your car work?

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Here's what you need to know...

  • If you are financing your vehicle, you will be required to carry comprehensive coverage
  • Even if you are not financing your car, if it still has a high value, you will want to carry comprehensive coverage on it
  • Comprehensive insurance covers any non-accident related damages

When you purchase a new vehicle (or new-to-you vehicle), you know that you are going to need auto insurance. If you are purchasing your vehicle outright, then you can get away with getting only the insurance that your state requires.

In most cases, each state requires that you carry bodily injury coverage and property damage coverage.

Additionally, some states will also require you to purchase uninsured motorist coverage and underinsured motorist coverage as well. Typically this occurs the most in a no-fault sate.

If you are financing your vehicle, however, your bank is not going to allow you to finance it unless you provide proof that you have secured a comprehensive auto insurance policy in addition to the minimums that your state requires for your vehicle.

The requirements for your insurance coverage may vary depending on the lending institution, but typically you can purchase the least expensive option.

Compare quotes from multiple car insurance companies on many different types of car insurance coverage from minimum auto insurance coverage to full comprehensive car insurance coverage.

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Comprehensive Auto Insurance and What it Does

Driving a car

Comprehensive insurance is an insurance that covers your vehicle in the event that something happens to it that is not related to a collision. Examples of what your comprehensive insurance will cover are:

  • Theft
  • Vandalism
  • Flood
  • Fire
  • Hail

Much like other types of insurance for your vehicle, there are different levels of insurance that you can purchase. The more expensive your car is, the higher your recommended coverage is going to be.

In most cases, unless you have a very high-end car, such as a sports car or a luxury vehicle, your lender will not require that you carry a specific level of comprehensive insurance, only that you show proof that you have it.

How Much Comprehensive Insurance Costs

Transparent piggybank with coins and red car

The cost of comprehensive insurance, just like the many other types of insurance, will vary based on the level of coverage that you carry.

If you get an insurance quote that includes comprehensive insurance, you will generally see three separate level options, lowest possible coverage, a medium level of coverage and a high level of coverage.

This will give you an idea of how much you will pay depending on the amount of coverage that you choose.

The type of vehicle that you purchase will also have be a significant determining factor in the cost of your insurance coverage.

The bottom line is, the more your car is worth (not the amount you paid for it, the actual value) the more you will pay for your comprehensive coverage. That is because newer cars are more typically more expensive to replace or repair.

Unfortunately, unlike other types of insurance coverage, your comprehensive coverage is not discounted because you have good safety features on your vehicle.

What many people don’t realize is that where they live, city and state, is a major factor when it comes to comprehensive insurance.

Because comprehensive coverage is about things outside of an auto accident, auto insurance companies have to take other things into consideration when determining a price for this type of coverage.

For example, if you live in a low-lying area or a water front location that is prone to flooding, you will pay more for your comprehensive coverage than someone who faces no natural disaster issues.

Additionally, a high crime area where car theft or vandalism is an issue will cause your comprehensive coverage to increase as well. Even the state you live in will influence the rates that you pay.

Lastly, how much you pay for your comprehensive coverage will depend on how much you are willing or able to pay in deductibles.

You have several deductible options:

  1. No deductible option – This which will mean that you will pay the highest premiums for your comprehensive coverage.
  2. $250–500 deductible – This is the most popular option.
  3. Deductibles increase in $500 increments – Some insurance companies do not offer a deductible higher than $2000.

When selecting a deductible you need to consider your financial situation very carefully.

Many insurance companies will not pay for damage repair on your vehicle until after you have paid your deductible to the company working to repair the damages on your vehicle.

Choosing a $2000 deductible so that you only have to pay $10 a month for your premiums does you no good if you can’t pay that deductible if the time comes.

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Should You Purchase Comprehensive Coverage for an Unfinanced Vehicle?

This is a question that is often asked by consumers when they purchase auto insurance. The answer to that question will normally depend on your specific situation.

For example, did you pay cash for a $20,000 car? If so, you will want to purchase full coverage for your vehicle, including comprehensive coverage. Do you drive a $500 junker? Perhaps comprehensive coverage is not necessary for a car with little to no value.

Comprehensive coverage can be a valuable commodity, ask anyone who has ever had hail damage or walked into a parking lot to find that their car had been “tagged” with graffiti. Comprehensive coverage will take care of that.

Comprehensive coverage will also cover damages caused by animals, which for some rural areas can be a very helpful insurance feature.

The bottom line is, however, if you don’t finance your vehicle then you will have to decide for yourself if you need comprehensive coverage for your car.

A good rule of thumb is to ask yourself how much you can afford to pay out of pocket if something should happen to your vehicle and this should help to answer your question.

Making a decision about your insurance does not have to be complicated. Most experts agree that if you have a newer vehicle, you carry a full policy, even if it is not financed.

It is also recommended that you carry more than your state-required insurance. A middle priced policy will usually account for all financial contingencies.

Auto insurance premiums actually change from year to year. Whether you are thinking about purchasing a new car or you are curious about other options for your auto insurance policy, you should annually check auto insurance rates.

You can easily do this by using our free, no obligation, quote tool found at the top of the page. Quote tools allow you to compare rates from several companies at one time, making it easy for you to quickly determine if you are getting the best rate for your auto insurance.

Compare Comprehensive Insurance Quotes

Whether you are looking to add some comprehensive coverage to your current auto insurance or if you are wanting to find an insurance policy for a new car, our quote will be your first step in finding the most affordable insurance options for your vehicle.

Get started with a free car insurance comparison by entering your zip in the box below!

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