If you’ve ever paid a large, unexpected expense out of pocket, you most likely know the value of insurance. But do you fully understand the insurance you have (or need)? Most people rely on their insurance agent to tell them what to get. Nothing wrong with that. But you should also understand the different types of insurance plans available to you. When looking for auto insurance, for example, you can get comprehensive insurance, collision insurance and liability insurance.
Reduce risk with comprehensive insurance
If you’re financing a new vehicle, the bank usually requires you to have comprehensive insurance. This is to protect the bank’s investment in case something happens to the vehicle. But if you’re buying your vehicle outright in cash, you do not have to get comprehensive insurance. However, insurance agents usually advice getting it in anyway. This is because comprehensive insurance offers several great benefits, including:
Theft and Vandalism
One of the best benefits of comprehensive insurance is the theft protection it offers. If data from the Insurance Information Institute is anything to go by, that’s a great thing. According to the III, the rate of car theft in the US was about 237.4 per 100,000 people in 2017. The dollar amount of those thefts was about $6 billion.
Imagine taking a loan to finance you dream car. Then it gets stolen. Terrible, isn’t it? Now imagine how much worse it would be if you didn’t have comprehensive insurance. That means you don’t have a car, but you still have to make monthly payments to the bank. Now that’s a disaster! With comprehensive insurance, your insurer would pay for the stolen car. Which makes it a no-brainer for those who drive expensive cars or those who live in high-theft areas.
Fire and flood protection is another reason your insurance agent may advise you to take up comprehensive insurance. In fact, this is the only type of auto insurance that will cover you if fire and flooding cause damage to your car. Since these events can result in a complete loss of your car, comprehensive insurance is certainly worth it for the peace of mind.
Animals usually don’t mean any harm, but unfortunately, they do cause harm. You may be driving down a rural road, enjoying the scenery when, suddenly, a deer appears out of nowhere. Despite your best NASCAR moves, you hit the deer or end up in a ditch. The damage to your car would not be covered by other types of insurance. Luckily, you listened when your insurance agent told you to get comprehensive insurance. Sigh of relief.
There’s no predicting what extreme weather will do. Comprehensive insurance covers you against damage to your car due to weather conditions. So if high winds or heavy snowfalls cause a tree branch to break and land on your car, you will be covered for the cost of repairing the damage.
Accidents happen. Which means you may have to spend money you hadn’t planned on spending. Your insurance agent usually has this in mind when advising you on different plans. Since comprehensive insurance usually has a lower deductible, it is easier on your pocket when an accident does happen. In case you’re wondering, the deductible is the amount you’re responsible for if you file a claim on your policy.
Is comprehensive better than collision insurance?
Comprehensive insurance does not cover damage caused by collision. So the question isn’t whether one is better than the other. Rather, it boils down to the different ways in which each one protects you. If you want to protect yourself in the event that you hit something while driving, or something hits you, then you need collision insurance.
Note that you can only buy collision insurance in combination with liability and comprehensive coverage. Your insurance agent can help you obtain both.
Visit Insurance Agent Near Me to find a local insurance agent who can assist you in finding the right auto insurance.