When it comes to car insurance the two most common are collision and comprehensive.
But that doesn’t mean that driver generally knows what they’re getting, or what they need. That’s why it’s important to do your research.
What is Collision Insurance?
If your vehicle is damaged in an accident with anything at all, your collision insurance will take care of it.
So, if you get into an accident involving another vehicle or an object of any kind you’d use this. It’s usually something you’re required to get if there’s any level of financing on your vehicle. Otherwise, it’s going to be entirely up to you.
Even a single-car accident is covered under collision insurance. So, if you’re involved in any kind of accident at all or your vehicle is hit or hits anything at all (even if the damage is from a rollover) this is the type of insurance that you’re going to use to cover it.
But it isn’t going to take care of anything related to the other person’s vehicle, medical needs of yourself, your passengers or the other vehicle or any damage that happens without driving the vehicle (meaning hail or vandalism).
There will also be some type of deductible with this type of insurance. The deductible is an amount that you have to pay before your insurance company is going to pay for anything. In most cases you’ll have around a $500 or $1,000 deductible. That means, if your vehicle is damaged, you will be required to pay the first $500 to $1,000 worth of repairs. Then your insurance company will pay the rest.
Of course, there is also a maximum limit to what your insurance company will pay as well. This is the amount that your company will not exceed when they pay out your claim.
What is Comprehensive Coverage?
Let’s take a look at the other side of this situation now.
Comprehensive coverage is designed to take care of things that aren’t related to driving your vehicle. This could be theft, vandalism, fire, explosion, earthquake, hail, riots or even collisions with animals.
As with collision insurance, you’re still going to have a deductible that you need to take care of. The deductible could be somewhere between $100 and $500, but you’ll have options for what you want to pay.
Then, if some part of your vehicle is damaged you pay that amount and the insurance company will take care of the rest. This could be for minor damage or for major damage. If you don’t have a loan of any kind on your vehicle you will have the option to get comprehensive but it’s not required.
Comprehensive and Collision Insurance: Differences
When we look at the difference between comprehensive and collision coverage the main thing is what causes the damage.
If the driver is in control of the damage then chances are it’s covered by collision insurance. That doesn’t mean you’re the one at fault. It means that the vehicle is being driven at the time of the damage.
On the other hand, comprehensive coverage is anything that happens outside of your control. This can seem a little bit off because some of those things still happen while the vehicle is being driven. For example, hitting a deer or being carjacked.
One other important thing to consider is the likelihood of the claim affecting your insurance rate. If you make a collision claim you’re likely to see your insurance rate increase. A comprehensive claim is less likely to increase your insurance. That’s because collision incidents could be tied back to you. Comprehensive claims typically aren’t.
A hit-and-run accident is something that you should definitely pay attention to in this situation, however. You want to make sure that you can get down something about the vehicle that hit you if they happen because even though they fall under collision, they could be considered your fault if you’re not careful.
Getting a police report and taking down information is the best way to protect yourself.
|You hit another vehicle||A tree falls on your car|
|You hit a boulder in the road||An animal jumps out in front of your car|
|You suffer a hit and run||Someone breaks your window|
|Someone steals your vehicle|
What Isn’t Covered By Comprehensive or Collision?
Now let’s take a moment to look at the things that neither collision nor comprehensive coverage actually cover.
They won’t take care of medical bills, for example. They also won’t take care of damage that comes from an uninsured or underinsured driver.
These types of insurance aren’t going to give you a rental vehicle if you need one either. If you get into an accident and need to borrow a vehicle you will want rental reimbursement coverage available. That’s something you’ll need to look into when you set up your insurance plan.
What Does it All Cost?
Your home state can have a significant impact on your car insurance rates. This can be attributed to high density populations, higher numbers of uninsured drivers, the costs of lawsuits and even unique insurance schemes.
In this chart created with data from The Zebra shows the ten most expensive states for car insurance. It shows Michigan continues to have the highest average annual premiums. The average cost of insurance is significantly more in Michigan compared to the second most expensive state, Louisiana.
Insurance rates will vary based on a number of different factors. For one thing, the state that you live in is important, as is the type of vehicle that you drive. Still, the average for comprehensive coverage is approximately $192 while collision is approximately $596.
Other factors, like your driving history, where you live, your credit score and even age and gender will also play a role in your costs. On top of that you’ll have additional factors that the insurance company can come up with on their own.
Your vehicle could actually cost you a great deal more when it comes to your collision or comprehensive costs. That’s because some vehicles are more likely to be stolen than others. If that’s the case for you then it means you’re likely going to pay a lot more on comprehensive coverage.
When it comes to your driving record you could find yourself in a lot of trouble. That’s because those who have a poor driving record will have to pay more to the insurance company. That’s because you’re considered a much bigger risk.
Finally, where you live impacts things like how much you drive, how you drive and what type of conditions you’re driving in. Living in urban areas makes you more likely to have an accident than someone living in a rural area. Someone living in an area with severe weather will likely pay more as well.
Collision And Comprehensive: When You Need Both?
Some people like the idea of getting as inexpensive of a policy as they can. After all, that’s going to save you money. But that’s not always the best option. For some, they prefer to have the best level of coverage possible to make sure that anything and everything is covered if they’re ever in an accident. The best way for anyone is to get both comprehensive and collision coverage.
Now, these two types of coverage mean that you’re not going to be responsible for the damage if you get into an accident or have any type of car damage, for the most part. Both types of coverage will be especially important if you:
- Lease or finance your vehicle
- Have a vehicle less than 10 years old
- Have a vehicle worth more than $3,000
- Have a history of vehicle damage
Leased vehicles or vehicles that are financed in any way my require both collision and comprehensive insurance. After all, whoever actually owns the vehicle is going to want their money if something happens to it. If your vehicle is worth a good amount or is newer then you also want to have both types of insurance because this will protect your investment. Chances are you will want to repair the vehicle, after all.
Should I Drop Collision Insurance?
You don’t need to keep collision insurance forever. In fact, there will come a time when you should be looking at getting rid of it.
For those who have a vehicle older than 10 years old it’s a good idea to get rid of collision insurance.
After all the vehicle value has probably decreased and you don’t need to spend so much to repair it. Paying for that collision insurance may actually be more than the repairs will cost. You can even look up the total value of your vehicle to find out whether it’s actually worth paying for this type of insurance.
Once you know the value of your vehicle, look at how much you pay for collision insurance for a period of 3 to 5 years.
If your vehicle value is less than the cost of the insurance you definitely don’t need it.
For those who are a little nervous about dropping collision put the money you would spend into a separate account and use it for any repairs you may need down the line.
Should I Drop Both?
If you were to decide to drop both types of insurance you would immediately be responsible for paying all of the costs if you have an accident. You would be responsible for any repairs needed to your vehicle.
Now, for some that might be useful because repair costs are significantly cheaper than you would pay for your premiums.
If your vehicle is newer or worth more, however, you may want to keep these types of insurance for a while longer.