It’s a mistake to assume that all vehicles being driven on our roads are insured. All insured vehicles carry liability coverage but not necessarily collision or comprehensive coverage. There are many factors that affect a person’s decision on the level of insurance they choose. There are three different policy types available and not all policy holders choose to purchase comprehensive auto insurance.

1. Liability Coverage- Meant to provide protection to the victim of an accident, if it is the policy holder who is at fault. In such a situation, in order to avoid incurring heavy expenditure, the driver is recommended to opt for liability coverage. Minimum coverage amounts vary between states, but it may be wise to insure yourself above that amount to reduce the risk of out of pocket expenses.

2. Collision Coverage- Coverage of this type can take care of all expenses incurred in the form of repair and replacement costs by the policy holder at the time of the accident but the point to remember is that this kind of auto insurance coverage would take into account the market value of the car while paying for damages sustained.

3. Comprehensive Coverage - This type of auto insurance is meant to cover the damages that occur or might have occurred because of events other than accidents. These events could be a flood, fire, theft, vandalism, collision with an animal, floods, or natural disaster.

According to the National Association of Insurance Commissioners, new car owners are more likely to purchase physical damage coverage. That’s no surprise – they’ve made a significant investment in a vehicle and wouldn’t want to pay out of pocket for the cost of the vehicle if it was stolen or written off.

The cost of insurance varies from state to state and this too can have an effect on the percentage of drivers who opt for comprehensive coverage. Insurance rates differ because a state’s urban population, traffic density, theft rates, labour costs, tort liability and other auto laws impact the cost of providing insurance and therefore the cost to the consumer. Income per capita also varies from state to state and not everyone can afford to take out a comprehensive auto insurance policy.

When considering whether you will take out a comprehensive auto insurance policy, check on the requirements in your state and consider your personal situation. Think about your driving habits, the amount of time that you spend on the road and the replacement cost of your vehicle. Can you afford not to be comprehensively insured?