Comprehensive auto insurance coverage is a type of insurance that covers you for practically everything that can arise by accident and do damage to your car. There are additional options and increases of coverage maximums available as well. The advantages are that you can have insurance coverage for practically any incident that can happen to your vehicle. The disadvantages, however, are that with all this coverage, the cost may be extreme.
There are 3 basic components to an automobile insurance policy:
Other items such as towing coverage and rental car reimbursement can be added to you policy. Another item is called uninsured motorist insurance. If your vehicle is in an accident caused by a vehicle that has no insurance, your insurance company will cover your costs. There is also an option to cover any driver of your vehicle, not just licensed drivers in your home. You can also use your extended coverage if you are operating a vehicle not owned by you including a rental car. Most rental car companies try to sell you accident insurance to cover you while renting their vehicle. With your car insurance policy this will not be needed.
Many times, to save money, you may increase your deductibles and decrease your coverages to save money. This is not a good idea if you operate your vehicle in areas of high risk or crime. Also, you need to remember, your policy will only cover up to a maximum amount. Any damages or settlements from legal action higher than the insurance coverage will have to be paid by you. A home, savings or even future earnings can be attacked if your insurance will not cover the settlement.
Most auto financing companies require the owner of the vehicle to have full comprehensive insurance coverage. They also have minimum deductible and maximum coverage requirements as part of the financing agreement. Leased vehicles usually have stricter restrictions than a loan. If you have an older vehicle and it is fully paid off, most states only require liability insurance. If your vehicle is worth less than the cost of the comprehensive insurance, it might be a smart idea to just have liability and medical coverage. Why pay for insurance to repair a vehicle if the value or replacement cost is less than the policy?