Do hurricanes, wildfires and floods have anything in common? When it comes to your car, yes they do. In fact, as far as your car insurance company is concerned, they’re almost identical. The common theme is comprehensive insurance. If you don’t have comprehensive insurance, you pay the cost of the damage caused by a hurricane, wildfire or flood.
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Comprehensive Insurance is Not Mandatory
New Hampshire is the only state where auto insurance is not required by law. Here in New Hampshire, the state motto is “Live Free of Die.” I involuntarily have become a bit of an expert on New Hampshire auto insurance laws. I was familiar with the laws simply based on living in New Hampshire. Recently, I unwittingly became more of an expert due to an uninsured driver rear-ending me.
When it comes to comprehensive insurance, every state goes by the “Live Free or Die” motto. No state requires drivers to buy this type of coverage.
How Comprehensive is Different Than Liability Insurance
Here’s the reason you are not required to buy comprehensive insurance. When an event other than an accident damages your car, it only impacts you. In these situations, you are not inflicting damage on someone else. Instead, the damage is limited to your finances. Fortunately, car insurance laws don’t require you to buy protection against your own decisions.
Should You Buy Comprehensive Insurance?
Whether you buy this insurance is entirely up to you. However, here’s the test of whether you should buy this type of insurance. Can you afford to replace your car if the car were destroyed by something other than an accident? If the answer is no, you should consider comprehensive insurance. If you can afford to replace your car, it’s not necessary.
Also consider whether you are prone to events that like floods, fires, hail storms or vandalism. These are examples of non-collision events that could seriously damage your car. If you can afford to replace your car. And if it’s unlikely your car will be damaged other than in an accident, you may not need comprehensive insurance. Below is an explanation of why this is true.
Insurance is Similar to a Tax
When you buy insurance you pay the money to an insurance company. The insurance company uses a portion of the money to run their business. If they’re publicly traded, they also work to put as much of the money as possible to bottomline profits. The business model for insurance is built upon the premise that on average, insurers will pay out in losses less than the amount collected in premiums.
Like any business, there is an overhead cost to buying insurance. Therefore, on average drivers can save money by not buying comprehensive insurance. This assumes that you are capable of setting aside the money to replace or fix your damaged vehicle. However, if you can’t save the money, that’s a different story. In this case you need insurance in order to be certain you can repair or replace the vehicle.
Not All Insurance Companies Are The Same
Unfortunately, most people don’t know if they have a good insurance company. That’s because the information has never before been available. Finally, it’s possible to know. Frankly, there’s no reason to buy insurance from an insurance company that sells low quality insurance.
The ValChoice analytics engine grades companies on value, claims handling and service. Get a report on your company so you know how well they measure up agains the competition.
At ValChoice we believe that anyone required to buy a product or service deserves to know the quality of the service they must buy. Transparency has never before been available for insurance. Technology drives the change that makes transparency possible. Hence, our mission is to provide this much needed information to consumers.