Understanding comprehensive and collision coverage is critical to making informed car-insurance decisions tailored to your unique circumstances, including evaluating the value of your vehicle, your budget, and driving patterns.
Your homeowner and auto policies typically feature a deductible that must be met before coverage will begin, making selecting an appropriate deductible essential to controlling costs.
What is Collision Coverage?
Collision coverage is the type of auto insurance policy designed to safeguard against damage caused by collision with another car or object, typically combined with comprehensive coverage to form “full coverage.” Typically, collision coverage pays up to your car’s actual cash value (blue book value minus depreciation) to repair or replace it in an accident.
Your collision coverage deductible has an effect on how much compensation is received from an insurance provider after making a claim. Some providers offer disappearing deductibles that decrease by an agreed-upon amount each time no claim is filed in that year.
Since most drivers who lease or finance cars do not own them outright, most are required to carry both comprehensive and collision coverage when leasing or financing cars. This ensures the lienholder or lender has some means of covering their investment if your vehicle is totaled or stolen; once the loan has been paid off it may make sense to drop these policies as their costs could outweigh their benefits.
What is Comprehensive Coverage?
Comprehensive insurance covers not only repairs related to collisions with other vehicles or objects, but also reimbursement for damage done from non-crash events like weather damage, fire damage and theft. It may pay to purchase this coverage if your area experiences higher rates of car thefts and animal collisions for instance.
Your insurance provider usually requires that when purchasing comprehensive coverage, a deductible be selected – this amount must be paid before they begin paying out claims for covered claims. Your policy’s limits for comprehensive cover typically equal the actual cash value minus depreciation.
Sometimes people combine comprehensive and collision coverage into one package called “full coverage.” However, if your vehicle is financed or leased through a lender, both types of coverage will likely be mandatory – in such an instance it’s essential that you fully understand their respective coverages before determining whether you need full coverage or not.
What is the Difference Between Collision and Comprehensive Coverage?
Collision and comprehensive coverages are typically included as part of an automobile insurance package. While liability policies cover damage only to other people’s vehicles and property, collision and comprehensive policies cover your own vehicle as well – with an agreed upon deductible payment amount applied against any claims for repairs.
Collision coverage will pay to repair your vehicle if it collides with another car or object such as trees, guardrails or buildings; as well as being hit by animals such as deer crossing the road. Comprehensive coverage pays to fix or replace damages from natural disasters, fire, falling objects theft and vandalism that do not involve collision.
Consider both your car value and ability to cover repairs yourself when making the decision whether or not to carry comprehensive and collision coverage. If it is worth less than about 10% of its total cost of coverage, perhaps dropping these options may be prudent.
Which is Right for You?
Comp and collision auto insurance both have their own individual advantages; each driver should decide which policy best meets their needs. Full coverage vehicle policies often combine comprehensive and collision protection. They’re often required if financing or leasing your car.
Comprehensive car insurance will likely protect your vehicle against incidents unrelated to accidents, such as theft and vandalism. It is also beneficial if you reside in an area prone to natural disasters where crime rates may be elevated.
Collision car insurance will help cover repairs that you cause in an accident that you caused, such as loans or lease agreements that require collision coverage. Similar to comprehensive, collision coverage requires payment of a deductible before insurers will cover damages.