Comprehensive insurance is usually a good idea whether you lease or own your car. If you financed or leased your vehicle, your lender will require that you have comprehensive and collision insurance.
Like other types of insurance, comprehensive policies have a deductible. You are responsible for paying this before your insurer pays a claim.
Comprehensive coverage
While state laws may not require you to carry comprehensive auto insurance, most car lenders will make you get it if you’re leasing or financing your vehicle. Comprehensive, or “collision-less” coverage, is an essential addition to your policy because it typically doesn’t kick in when your car hits something else but protects you from damage caused by things outside your control, like extreme weather events and would-be thieves.
Especially if you live in an area susceptible to natural disasters (like wildfires, hurricanes, or tornadoes) or big cities where other drivers are more likely to be careless and hit your car, comprehensive coverage is worth the extra cost. That said, it’s a good idea to consider dropping it once your car has been paid off and you have enough cash to replace it. Otherwise, you should probably keep it as long as your car isn’t worth more than 10% of its actual cash value.
Uninsured/underinsured motorist coverage
Uninsured/underinsured motorist coverage is a crucial element of your personal auto insurance policy that protects you and the insured members of your household against drivers who have zero or minimal car insurance. It also protects against at-fault drivers whose coverage limits are not high enough to cover the expenses of an accident they caused entirely.
It is required by law in some states and is available as an optional endorsement in others. It’s also very affordable. For example, let’s say you get into a severe accident with a driver with only $25k in coverage. Your uninsured/underinsured motorist bodily injury coverage will pay your medical bills up to your policy’s limit.
In addition, UM/UIM property damage coverage will pay for your vehicle repairs up to your policy’s limit. Many insurers offer a higher level of UM/UIM called supplemental uninsured/underinsured motorist coverage for an additional premium. Talk to your independent agent about this.
Collision coverage
Depending on your circumstances, collision coverage is optional or may not be worth it. If your car is still financed or leased, your lender may require you to purchase comprehensive and collision coverage until the contract ends.
Aside from the requirement to buy collision coverage, it’s essential to consider how much your vehicle is worth and what you’re willing to pay in terms of premiums and deductibles. If your vehicle is old and has little value, you might feel it’s not worth collision insurance.
Another thing to consider is your area’s risk for natural disasters and crime. For example, if your region is prone to hurricanes and other weather-related catastrophes, it might be worth the extra expense of collision and comprehensive car insurance. Also, consider whether you’ll need rental reimbursement insurance to cover the cost of a rental car while yours is being repaired from an accident or other covered event.
Theft coverage
A car can be stolen for a variety of reasons. Theft coverage, also part of comprehensive auto insurance, pays to replace or repair your vehicle if it is stolen. The amount of the payout depends on your car’s actual cash value (ACV), which takes into account depreciation and your deductible.
Thieves often target premium stereos, speakers, and GPS devices for resale. Other parts like rims, tires, and truck tailgates are also popular targets. A thief may discreetly remove these features from your car and abandon them elsewhere.
Although comprehensive insurance typically covers these upgrades, they don’t always pay for a complete replacement. This is why informing your insurer of all custom features on your car is essential. It is possible to purchase additional theft protection or an endorsement on your policy to help protect these investments. Also, check with your agent to see if you can add rental reimbursement to your policy in case of a stolen vehicle.
