Will Auto Insurance Cover Severe Weather?
Introduction
Severe weather can cause significant damage to your vehicle, and it's important to know whether your auto insurance policy will cover these events. Let's explore the types of coverage available and how they can protect you against severe weather damage.
Auto Tornado Insurance
The only way to insure your car against tornado damage is through comprehensive coverage. Collision and liability coverage do not offer protection from tornadoes. Let's analyze and review what a comprehensive policy covers and how much it typically costs.
What is Comprehensive Coverage?
Comprehensive coverage usually protects your vehicle from damage caused outside of the course of normal driving. This includes damage not caused by driving the vehicle. Comprehensive coverage encompasses the following categories of damage:
- Debris fall
- Glass damage
- Water damage
- Lightning
In case of tornadoes, floods, and other natural disasters, your car should be covered as long as the damage was caused by the disaster itself.
Image Description: Illustration showing various types of damage covered by comprehensive insurance.
Binding Restrictions
Binding restrictions are more common with floods and hurricanes but can occur in the event of any natural disaster or severe weather. An insurance company may restrict new lines of business or changes to existing coverage days or weeks before a storm to avoid exorbitant claims payments from drivers who add coverage just before a storm. As long as you have comprehensive coverage before a binding restriction, you should be covered.
Is Comprehensive Coverage Required?
There are three cases in which you may be required to carry comprehensive coverage:
Looking to Resell the Vehicle
Even if you own the vehicle, having this coverage can be a good idea if you want to resell the vehicle. Collision and comprehensive coverage are your only remedies against physical damage to your vehicle.
Financing Your Vehicle
Similar to leasing, if you are financing a vehicle, the lender (dealer or bank) technically owns the vehicle and will require you to maintain comprehensive coverage to protect the vehicle's value.
Leasing a Vehicle
Since you are expected to return your leased vehicle in near-perfect condition, this coverage is required by the leasing agency to retain the vehicle's value.
Image Description: Infographic showing scenarios where comprehensive coverage is required.
Cost of Comprehensive Coverage
The cost of comprehensive insurance depends on two factors: the value of your vehicle and your specific deductible. If it costs more to replace your vehicle, your insurance company will charge you more. Your deductible and premium amount are inversely related; raising one will lower the other. Standard deductibles for comprehensive coverage range from $500 to $1000 but may vary depending on your insurer. The lower your deductible, the higher your premium.
Will a Tornado Claim Increase Your Premium?
Yes. Any claim will raise your premium. However, for a comprehensive claim, the rate increase is relatively small compared to a collision or liability claim. Most insurance companies consider comprehensive claims to be outside of the driver's control. The average rate increase after a comprehensive claim is around $100 per year.
Image Description: Chart showing average premium increases after comprehensive claims.
Conclusion
Comprehensive coverage is essential for protecting your vehicle against severe weather damage, including tornadoes. While it may increase your premiums slightly, the protection it offers far outweighs the cost, especially in the event of a natural disaster. Ensure you have comprehensive coverage in place before severe weather strikes to avoid any binding restrictions and protect your investment.