There is so much to know about auto insurance it can be overwhelming to know what you need a when you need it. Often you only worry about your coverage when it is too late, and something has happened.
Let’s first review the terminology. Collision coverage will help pay for repairs to your car (as well as replacement costs, in the event your car is totaled) after:
- Crashing into another car.
- Crashing into an object.
- Rolling over.
Comprehensive coverage will help pay for repairs to your car or replacement of your car after it’s been damaged by events that aren’t accident-related.Typically, with comprehensive coverage you’ll be covered for damage from the following:
- Fire.
- Theft.
- Vandalism.
- Falling (missile) objects.
- Hitting or being hit by an animal including deer, cows, bears, moose and birds.
- Natural disasters.
Note that not all policies are the same. Before purchasing comprehensive coverage, make sure you know what your comprehensive policy will cover.
You may find these coverages packaged together as “physical damage coverage.“
When you’re shopping for car insurance remember it typically consists of two components:
- Physical damage coverage (comp and collision) refers to coverage that pays your own costs.
- Liability coverage refers to coverage that pays others’ costs.
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Determining Necessity
Because comprehensive and collision are optional types of car insurance coverage, you should consider some factors before determining whether or not you need to purchase these coverages.
Your Car’s Value
The value of your car is an important consideration when determining whether you need collision and comprehensive coverage. If you car is:
- Older and/or low-value, it may not be worth purchasing these coverages, since they will only pay up to the estimated fair market value of your car. We will often ask our clients- if your car were to be totaled, could you afford to replace the car outright? If not, you may want to consider keeping some comp and/or collision on the vehicle.
- Newer and/or high-value, having these coverages can save you from paying out significant costs to repair or replace your car (if totaled)*.
* IMPORTANT: If your car is totaled, your collision and comprehensive insurance will only pay you the estimated fair market value of the vehicle. THE INSURANCE COMPANY DETERMINES THIS AMOUNT. If you have a loan or lease, consider gap coverage, which will pay the difference between your how much you owe and the car’s cash value.
- Your Driving Habits. You should also consider what you put your car through on a daily basis. For example, if you drive a lot of miles, or if you park your car in a location that is especially susceptible to theft or vandalism, you might want to have comprehensive coverage.
- NOTE: While these coverages are not mandatory in any state, they are generally required as part of a car loan or lease agreement.
Still uncertain what the right coverages are for you? Talk to a licensed insurance agent. They can discuss options with you so you can end up with the right coverages for your situation. We’d be happy to review your options for your given situation. We can be reached at 603-273-0953 or www.keslarinsurance.com. We are an independent insurance agency providing home, auto, business and life insurance in NH and Maine.
