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rental car damage and liability insurance

We all want fancy cars, btu those fancy cars are expensive, and most of us don’t have enough cash to buy it upfront, so we must ask for a loan. As we all know, most lenders will request us to add comprehensvie coverage along with collision coverage. 

Most lenders will request you to add comprehensive coverage along with collision coverage

This coverage option will protect our car against theft, vandalism, natural disasters, among others. In this article, we will discuss how comprehensive car insurance and financing work together.

What is Comprehensive Car Insurance?

Comprehensive car insurance is a coverage option that will protect your vehicle against non-collision damages. Here you can see what Comprehensive coverage covers:

It covers.

  • Theft

  • Vandalism

  • Natural disasters like fire, flood, hurricanes, tornadoes, earthquakes, etc.

  • Falling objects like rocks, trees, hails, etc.

  • Animal-related damages like hitting a deer, rodent damages on your car wires, etc.

  • Windshield damage

  • Rental car in case of car theft or totaled by natural disaster for a certain amount of money up to 30 days.

How Does Financing Work?

Financing is the process of borrowing money from a lender to purchase or leasing a car. We will explain how these 2 financial methods work:

If your lender borrows you money to buy a car, you will have to pay the amount of money requested on your loan plus interest during a certain amount of time stipulated in your loan’s contact.

If you choose leasing as your financial option, you must think about leasing like a sort of “rental agreement”, once this agreement finishes, you can choose to pay the rest of the remaning money to finish purchasing that car, or you can turn your car back to the lender.

Note: many middle and high schools often request leasing to purchase computers, this way they can renew them all every 3 or 4 years.

Is better to ask a loan to a credit unions, bank or car dealership?

It depends, in most cases banks and credit unions work under fedearl and state laws against usury. We don’t say car dealerships would be attempt usury against you. However, their interest will be higher compared to banks or credit unions due they request the loan to a bank, and they also want to get some profit for that loan.

How Do Comprehensive Car Insurance and Financing Work Together?

Comprehensive car insurance and financing work together in a few different ways. First, most lenders require you to add comprehensive coverage along with collision coverage. They want to be sure their investement is protected in case your car suffer any damage (no matter if it’s a collision or an act of God).

Second, comprehensive car insurance is the best way for lenders to receover part of their loan if you suffer an accident, or your car theft. Let’s say your car is stolen, so your comprehensive coverage will cover the replacement and repair bills of your car, this way you can continue paying the money you owe to the lender without having any financial trouble.

Third, depending on the car insurer you choose to add comprehensive ceoverage for your vehicle, you will have extra benefits when your car is being financed. For example, some car insureres may offer Gap insurance in their coverage options. This coverage option will pay the difference between what you owe to the loan or lease and your vehicle’s actual cash value (ACV), up to the limit of your policy in case your car is stolen or totaled.

How to Choose the Right Comprehensive Car Insurance Policy for Your Financed Car

I know, you have to add comprehensive coverage for your car, your lender requests it. So you should think about what do you need to check before choosing a comprehensive coverage. Let’s take a look:

Coverage Options

When you request for a quote to any car insurer, you must check on their declaration page, it will display all their comprehensive coverage options. For example, some car insurers will interpret diffently what sort of water damage are included in your policy.


Your car deductibles are something you never think about this until you suffer an accident. Setting deductibles let you play an important role on your premiums. When choosing $1,000 on deductibles as an example, you’re letting your car insurer you won’t file a claim that lightly. If you suffer an accident and you have to file a claim, your car insurer will deduct that amount of money from their settlement (if your repair bills are woth $1,050 and your dedictbles are $1,000 your car insurer will only give you $50. For that money I wouldn’t even file a claim). Setting high deductibles will also have an important impact on your premiums, reducing them significantly.


In many cases, you will have to have a look on how much will you have to pay per year. Keep this tip: Sometime the cheapest policy may not cover all you need. However, some most expensive policies may cover the same than another one that is $50 or even $100 cheaper than the most expensive one.


Check on Better Business Bureau ( how good are these car insurers, do they have many claims in that website? Check the reveiws, you can see if those complains have been verified or not.

You should also check their National Association of Insurance Commissioners rates. NAIC has a complaint score where you can see the amount of complaints they receive from that car insurance company’s volume of work is high or not.

Another important factor you should focus is their financial strength. AM Best can help you on that. In the end, you want to know if that car insurance will pay the claim you file or not.


Comprehensive coverage and financing work together to protect your investment in your vehicle. This coverage option will protect your vehicle against non-collision damages like theft, vandalism or natural disasters, among others. When you ask for a loan to any lender, you must consider the amount of interest you must pay, depending on what sort of lender you ask for your loan, you will pay more or less interests.

Car dealerships tend to add more interests on their loans, so before choosing the first one you see, please check several banks or credit unions to get the best loan for your vehicle. As you have to add comprehensive coverage along with collision coverage, you must check for each car insurer’s coveage options, perhaps you can add Gap insurance to your policy, helping you to pay your loan if your car is totaled or stolen.

Other readers were also interested in the following posts:

How to Compare Comprehensive Coverage Policies

How to Get Comprehensive Coverage Car Insurance Discounts

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