Do I Need Comprehensive Coverage?

Is Comprehensive Coverage Required by State Law?

Although state laws vary by state, nearly all states require liability and property damage coverage. However, comprehensive coverage goes further, and that means it's unlikely to be required in your area. When in doubt about your legal obligations, check with your state's department of motor vehicles (DMV).

Two states effectively allow drivers to avoid car insurance. New Hampshire doesn't have a law requiring drivers to maintain any level of insurance. However, drivers in New Hampshire without insurance are held personally responsible for the cost of any medical bills or property damage caused by a crash.

In Virginia, drivers can avoid insurance requirements by paying an "Uninsured Motor Vehicle" fee. Like in New Hampshire, Virginia drivers are responsible for covering the costs related to a crash, whether or not they have insurance coverage.

Do You Have a Loan on the Vehicle?

Many lenders require full coverage insurance on vehicles they have financed. Comprehensive insurance is part of that mandatory coverage. When you sign your loan papers, you agree to protect the vehicle against physical damage by purchasing both comprehensive and collision insurance. You are also required to purchase comprehensive and collision coverage if you lease a vehicle.

Failure to notify your lender of your insurance coverage can lead to expensive penalties. Ask your insurance agent to list your lender as loss payee on your vehicle. By doing so, your insurance carrier will automatically notify your lender of your coverage.

What Is Your Level of Risk?

Do you regularly drive on country roads where deer frequently cross? Do you park your car under an aging tree every night? Do you live in tornado alley?

All of these things could increase the risks to your vehicle. If you decide your car faces a lot of risk, then it could be worth the costs to add comprehensive coverage to your insurance policy—for the peace of mind, if nothing else. On the other hand, if you live in a city with mild weather and park in a garage, you may feel secure without additional coverage.

What Is the Value of Your Vehicle?

If a tree branch falls on your car and you have to make a claim, your payout will depend heavily on how much your car was worth to begin with. That's why knowing the value of your vehicle will help you determine if it is worth it to pay for comprehensive coverage. Check with Kelly Blue Book and the National Automobile Dealers Association (NADA) to get a good estimate of your vehicle’s value.

One rule of thumb is to compare the value of your car to the premiums you'd pay with the comprehensive coverage. If your car isn't worth at least 10 times more than the cost of premiums, then the coverage might not be a cost-effective policy.

How Much Does Comprehensive Coverage Cost?

To compare the cost of insurance to the value of your car, you've got to do some research to find out how much comprehensive coverage would actually cost you.

The great thing about comprehensive coverage is it is typically reasonably priced. As long as you are not a high-risk driver, comprehensive coverage can be well worth the price. Even an older vehicle might still be worth a windshield replacement. Determine how much you would pay for comprehensive coverage by calling your insurance agent or your insurance company directly.