Insurance

Collision vs. Comprehensive: Auto Insurance Guide

Auto Insurance Buying Guide: Collision vs. Comprehensive

Ultimately the other way that you can guarantee that your damaged vehicle is repaired or replaced properly is to buy collision and comprehensive insurance coverage. These types of coverage are known as physical damages coverages. They address two kinds of accident. You usually cannot purchase collision coverages without buying comprehensive. However you may be able to buy comprehensive coverage on its own, this depends on the particular insurance company you’re purchasing coverage from.

While states require drivers to purchase liability insurance, no state requires that you buy comprehensive or collision coverage. If you have a lease or a loan on your vehicle, your lender will require that you purchase this type of insurance coverage in order to protect their interests.

The cost of coverage will depend on the value of your vehicle, your age, your driving records, the deductible amount you choose as well as how difficult it is to repair your car.

Difference Between Collision and Comprehensive Coverage

Both of these coverage plans ensure that you will be able to repair your car for damage that you wouldn’t be able to afford otherwise.

Collision Coverage

Collision coverage pays to repair or replace your car if you have an accident and fault is disputed, if you are at fault in an accident, if you are not in fault in an accident and the other driver is uninsured or if you are the victim of a hit and run accident. This type of coverage also gives your insurance company the ability to work on your behalf even when you are not at fault. If you pay your deductible and file a damage claim, your insurance company will seek restitution from the at-fault party, including refunding your deductible.

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Comprehensive Coverage

This type of insurance coverage is used to repair or replace your car if the vehicle is damaged by flood, fire, hail, a falling tree or natural disaster or vandalism, if the car is stolen or if it is hit by an animal or deer. This coverage often extends to any vehicle you may rent as well. Either way, you will pay a deductible (that you choose when purchasing coverage) before the coverage will activate.

How much collision and comprehensive coverage should you buy?

You cannot choose how much to buy as the most that an insurance company will pay out is the actual value of your car (what it was worth on the open market before damage occurred) minus the deductible amount. You can negotiate the value of your car if loss occurs by providing examples. Settlements will include any fees or taxes paid at the time of purchase.

Choosing a Deductible Amount

A higher deductible amount will mean a lower annual premium. The deductible should be an amount you can easily pay. Many drivers choose $500. If you cannot pay your deductible, the repair shop itself will file a mechanic’s lien on your car until you pay. If you lease your car, the lender may require that you keep a deductible at a certain amount or lower.

Comprehensive or Collision Insurance Claims

Comprehensive claims generally will not raise your insurance rates only if you file many claims in a short period of time. A single collision claim may or not may raise your rates; this depends on your particular insurance company. Two collision claims will most definitely increase your rates. Experts recommend that you only use your insurance for big claims.

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When to drop comprehensive or collision coverage

Ultimately this will depend on where someone lives and their driving records. When a car’s annual premium exceeds the value of the car by 10%, it’s time to drop coverage. This will depend on the make and model of the car, but generally is when the car is 8-12 years old. This typically occurs after a car loan ends and the driver is the owner of the car. Experts recommend dropping coverage when you would no longer make a major repair to the car in event of an accident.

 

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