Is it worth getting comprehensive car insurance?

When it comes to purchasing car insurance, it’s worth taking the time to understand what is covered by different policies and compare the costs to work out what is right for you. Everyone needs some form of insurance – even if you rarely drive your car. But there are lots of differences between policies in terms of conditions, exclusions, and price.

What is comprehensive car insurance?

Comprehensive car insurance means insurance with the best possible cover. Because it is the most comprehensive, it is generally the most expensive type of cover available. Comprehensive car insurance will cover you for lots of situations and problems that can arise with car ownership, including if you damage someone else’s car or property, if you damage your own car, if you’re a victim of theft or a car break-in, and in the case of natural disaster such as storms, floods, fire and earthquake.

Obviously this level of cover is great, but it can be quite pricey depending on other factors that affect your premiums. If you’re unsure whether you should go with comprehensive car insurance, or opt for a different, cheaper alternative, it’s a good idea to seriously think about factors that determine how important comprehensive cover could be for you and your personal circumstances.

Consider the value of your car

It’s almost always worth getting high-level cover when you’re driving a new car. However, if your car is older and not worth as much money anymore, it can be excessively expensive without offering much value. As a general rule, you wouldn’t want to be spending more than 10% of your car’s value on premiums each year – so if your car is worth $10,000 and your car insurance is costing you $1000 annually, you probably want to look at cheaper alternatives.

Consider whether you can afford to be without your car

Imagine this: you’re driving to work, you’re distracted by the kids playing up in the back of the car, and you accidentally don’t give way at a roundabout, smashing into another motorist. You’re not hurt at all, but both your car and theirs are badly damaged and will take weeks – and a lot of money – to repair.

If you have comprehensive car insurance, this will be a nuisance, but not much more than that. All your repair costs will be covered by your insurer, and you won’t need to worry about being out-of-pocket for the cost of repairing the other driver’s car either. Your insurance may even include a free hire car while yours is being repaired, so you won’t be off the road. If you didn’t have that high level of insurance, you could be without a car for weeks while you gather the funds you need to pay for repairs.

Consider the money you owe on your car

If you took out a loan to buy your car, you may not have the option of dropping from comprehensive car insurance to a cheaper alternative. Some car loans include conditions around keeping up high level insurance. Check with your loan provider before making any decisions.