Introduction
Automobile insurance is a vital fiscal cushion that ensures you against unexpected costs of automobile damage or loss. Of all the types of coverage offered, comprehensive insurance and collision insurance are two of the most significant policies automobile owners can get. But both coverages differ in what they cover.
It is important to learn about the dissimilarities of comprehensive and collision insurance so you can make the right choice with your policy. In this piece, we shall discuss what they cover, compare them, identify when you should have them, and how you can choose the appropriate coverage for your car.
What is Collision Insurance?
Collision insurance covers damage to your vehicle that results from a direct impact with another car, an object, or even a rollover accident. Regardless of who is at fault, this coverage helps pay for repairs or replacement costs, minus the deductible.
What Does Collision Insurance Cover?
- Crash into another vehicle – When your car hits another vehicle, either it was your fault or not, collision insurance covers damage to your vehicle.
- Striking an object – In the event of mistakenly running into a pole, tree, fence, or guardrail, collision insurance will repair it.
- Single-car accidents – If your vehicle rolls over or skids off the road and crashes, this policy will help cover the repairs.
- Hit-and-run accidents (depending on your policy) – In some cases, collision insurance may cover damages caused by an unidentified driver who flees the scene.
What Collision Insurance Does Not Cover
- Damage caused by theft, vandalism, or natural disasters
- Mechanical breakdowns or routine wear and tear
- Medical bills for you or your passengers (this is generally paid for by personal injury protection or medical payments coverage)
- Damage to the other driver’s car (this is paid for by liability insurance)
Example Scenario
Suppose you are driving on a rainy day, and your vehicle skids, bumping into a light pole. The headlights and front bumper are damaged. Since this is a collision-related incident, your collision insurance will pay for the repair of your vehicle once you have paid your deductible.
What is Comprehensive Insurance?
Comprehensive insurance, also referred to as “other than collision” insurance, pays for damage to your vehicle resulting from incidents other than collision. That is, if your car is injured by theft, fire, vandalism, natural disaster, or any other unforeseen circumstances, comprehensive insurance will provide for the cost of repairs or replacement.
What Does Comprehensive Insurance Cover?
- Theft – If your vehicle is stolen and not found, or if it is recovered with damage, comprehensive insurance pays for the loss.
- Vandalism – If your vehicle gets spray painted or your windows get broken, comprehensive insurance will cover the repairs.
- Natural disasters – Flooding, hurricanes, tornadoes, earthquakes, or hailstorms can do heavy damage to vehicles, and comprehensive insurance pays for this.
- Fire or explosions – If your vehicle is burned, either due to an accident or other external factors, this policy will cover the repair.
- Falling objects – If a tree branch, boulder, or other object falls on your vehicle and damages it, comprehensive insurance will cover the repairs.
- Animal damage – If you collide with a deer or any other animal while driving, comprehensive insurance will take care of the caused damage.
What Comprehensive Insurance Does Not Pay For
- Collisions with other vehicles or objects
- Routine maintenance or mechanical breakdowns
- Your medical bills or your passengers’
- Damage to another driver’s car in an accident
Example Scenario
If you wake up to discover your car’s windows broken from vandalism. Since it was not an accident caused by a collision, your comprehensive insurance will take care of the cost of repair after you will have paid your deductible.
Key Differences Between Comprehensive and Collision Insurance
To further clarify the difference between these two kinds of coverages, here’s a comparison:
| Feature | Collision Insurance | Comprehensive Insurance |
|---|---|---|
| Pays for damage from a collision with another car | ✅ | ❌ |
| Pays for damage from colliding with an object (e.g., tree, pole, guardrail) | ✅ | ❌ |
| Pays for theft, vandalism, or fire | ❌ | ✅ |
| Includes natural disasters (e.g., floods, earthquakes, hailstorms) | ❌ | ✅ |
| Includes damage from striking an animal | ❌ | ✅ |
| Pays for rollover collisions | ✅ | ❌ |
| Needed for car loans/leases | ✅ | ✅ |
Do You Need Both Comprehensive and Collision Insurance?
Though neither comprehensive nor collision insurance is compulsory, they could be required if you are leasing or financing your car. Lenders require both of these coverages to safeguard their investment in the event of damage or loss.
Even if your car is paid off, having both policies can provide peace of mind and financial protection. Here are some factors to consider when deciding whether to keep both coverages:
1. The Value of Your Car
- If your car is new, expensive, or has a high resale value, keeping both collision and comprehensive coverage is a smart decision.
- If your vehicle is old and not worth much, it may not be worthwhile to pay for these coverages.
2. Your Location and Risk Factors
- If you reside in a region with harsh weather, comprehensive coverage is worth it.
- If car theft or vandalism is prevalent in your region, comprehensive insurance is useful.
- If you drive regularly in congested areas or bad roads, collision insurance would assist in footing accident damages.
3. Your Financial Situation
- If you lack the finances to replace your vehicle out-of-pocket in the event of an accident or theft, retaining both coverage is advisable.
- When the amount of insurance premium and deductibles is more than your car’s actual value, you can opt to cancel collision or comprehensive coverage.
Comprehensive and Collision Insurance Cost
The expense of both policies differs depending on the following:
- Car make and model – Luxury cars are expensive to insure.
- Age and driving record – Younger drivers and drivers with previous accidents can be charged more.
- Location – Places with high theft rates or frequently occurring natural disasters raise insurance charges.
- Deductible level – Increased deductibles reduce monthly premiums but boost out-of-pocket expenses in a claim.
How to Select the Ideal Auto Insurance Coverage for Your Requirements?
Choosing the optimal mix of comprehensive and collision coverage relies on a range of personal factors, such as your car’s value, your finance situation, and risk exposure. To help you decide whether you require both coverages or need to exclude one, here is a step-by-step guide.
Step 1: Identify Your Car’s Value
The simplest way to evaluate your car’s worth is to use online valuation sites such as:
- Kelley Blue Book (KBB)
- Edmunds
- National Automobile Dealers Association (NADA)
If the market value of your car is low, it may not be worthwhile to have both comprehensive and collision coverage. The rule of thumb is:
- If your collision and comprehensive annual premium is more than 10% of your car’s worth, you may want to drop one or both of the coverages.
- If your vehicle is valued under $2,000, it won’t be worth paying for full coverage.
Step 2: Evaluate Your Finances
Ask yourself:
- Can you afford to pay out-of-pocket if your car is damaged, stolen, or totaled? –
Do you have enough savings to replace your car if it’s a total loss? –
Would repairing the car cost more than the car’s actual value? –
If paying for repairs or replacing your car would cause financial strain, the best choice may be to keep comprehensive and collision coverage.
Step 3: Think About Your Driving Patterns
Your driving pattern on a daily basis affects the chances of accidents or damages. Think about these aspects:
- Commute Distance: If you cover long distances on a daily basis, the chance of an accident is higher, and thus collision insurance is a good idea.
- Road Conditions: If you drive on poorly maintained roads or in areas with heavy traffic regularly, collision insurance is a wise choice.
- Weather Conditions: If your region is hailstorm-, flood-, or wildfire-prone, full insurance can help safeguard your vehicle against damage caused by non-collisions.
Step 4: Assess Your Location’s Risk Factors
Your location’s crime rate, accident record, and environmental hazards must factor into your decision:
- If you reside in a high-theft or vandalism-permitting metropolis, comprehensive cover is essential.
- If your location is susceptible to severe weather (hurricanes, tornadoes, floods, hail), full insurance can protect you from expensive damages.
- If your city experiences high accident rates, collision insurance is a must.
Step 5: Check Lender or Lease Requirements
If you finance or lease your car, most lenders demand both collision and comprehensive insurance to cover their investment. Check your lender before you make any changes to your policy to comply with their demands.
How to Save on Your Comprehensive and Collision Insurance
If you choose to retain both coverages but would like to save money, consider the following approaches:
1. Raise Your Deductible
An increased deductible (what you have to pay first before insurance sets in) may reduce your monthly premium. Just be sure you will be able to afford the amount of the deductible in the event of a claim.
2. Group Your Insurance Policies Together
A lot of insurance companies provide a discount if you combine your automobile insurance with:
- Home or renters insurance
- Multiple vehicles on the same policy
3. Maintain a Good Driving Record
A clean driving history (fewer accidents, speeding tickets, or violations) can qualify you for lower premiums and safe driver discounts.
4. Install Safety and Anti-Theft Devices
Some insurers offer discounts for vehicles equipped with:
- Anti-theft alarms
- GPS tracking systems
- Automatic emergency braking (AEB)
- Dash cams
5. Shop Around for Better Rates
Insurance rates vary by provider, so it’s wise to compare quotes from multiple companies. Some of the top insurance providers include:
- Geico
- State Farm
- Progressive
- Allstate
- Liberty Mutual
Looking for discounts and special promotions can lower your insurance rates too.
Frequent Misconceptions Regarding Comprehensive and Collision Insurance
Myth 1: Comprehensive Insurance Covers Absolutely Everything
Most people mistakenly believe that comprehensive insurance covers everything, but that is not correct. It only pays for non-collision-related damages (theft, weather, vandalism, etc.). It does not pay for accidents—that is covered by collision insurance.
Myth 2: Collision Insurance Pays for Medical Expenses
Collision insurance only reimburses for damage to vehicles—not for medical costs. If you do get hurt, you’ll want personal injury protection (PIP) or medical payments coverage (MedPay) for bills.
Myth 3: Comprehensive and Collision Insurance Pay for Personal Items
If your laptop or phone is stolen from your car, comprehensive insurance does not cover it. Instead, you’d need to file a claim under homeowners or renters insurance.
