What Are Comprehensive & Collision Auto Insurance Coverages?

Auto insurance comprehensive and collision are two types of coverages that protect your vehicle in the event of damage or theft. They are often sold together and jointly referred to as physical damages coverage. While both coverages are optional, they can provide valuable protection depending on the value of your automobile and your financial circumstances. They are normally required if you take a loan to buy a car or you lease it.

Comprehensive Coverage protects your vehicle against non-collision-related incidents or events, such as theft, vandalism, natural disasters, falling objects, fire, or damage caused by animals. If your car is stolen or damaged due to one of these covered events, your comprehensive coverage will help pay for the repairs or replacement of your vehicle, up to the actual cash value (ACV) of the car. ACV is the depreciated value of the vehicle at the time of the loss. Keep in mind that comprehensive coverage usually has a deductible, which is your out of pocket contribution to the loss.

Collision Coverage provides protection for your vehicle in the event of a collision with another vehicle or object, regardless of fault. If you are involved in an accident and your vehicle is damaged, collision coverage will pay for the repairs or replacement of your car, up to its ACV, minus the deductible.

These coverages are particularly useful if you have a newer or still valuable vehicle that would be costly to repair or replace. When considering comprehensive and collision coverage, you should weigh factors such as the value of your vehicle, your ability to cover potential repair costs or replacement out of pocket, and your risk tolerance.

Comprehensive and Collision is the physical damages component of a full coverage policy, which includes liability coverage too. When you drop these two components from your full coverage automobile insurance, you are left with a liability only policy. Liability coverage is required by law virtually in every state and covers the damages you may cause to others in an accident. However, comprehensive and collision coverage focus on protecting your own vehicle.

Although these coverages are considered optional since they pertain to your own vehicle, it is essential to understand that without them, you would be responsible for repairing your vehicle out of pocket. Given the high value of cars these days, potential losses can amount to tens of thousands of dollars. Coping with such financial commitment without insurance can be challenging for many people.

Each option has a predetermined deductible amount that you must pay before the insurance company settles the remaining damages. Consequently, many drivers may choose to overlook minor incidents and handle them out of pocket, as it tends to be more cost-effective in the long run since you may not get much money after the deductible and this may prevent an increase in auto insurance premiums.

As a general rule, individuals with older cars may opt not to carry these coverages, as potential losses may not be significant enough to warrant the additional expense. Commonly cars over 10 years old or worth under $5,000 are considered to be not worth having Collision and Comprehensive coverages. This can still depend on your personal circumstances. For example, if you don’t have any savings to pay for repairs or replacement and you are currently getting a great deal on full coverage car insurance, you may choose to pay the premium

It is important to note that each person’s risk tolerance varies, and personal circumstances often influence these decisions. However, if you have a loan on your vehicle, it is typically mandatory to have comprehensive and collision coverage. It is also advisable to have these coverages if you own a decent car. By purchasing a full coverage car insurance that includes both collision and comprehensive, you protect the investment you made on the vehicle.

If the premium is too high, you may consider increasing deductibles before dropping C and C completely. This may yield enough premium savings and may be a worthwhile solution. Even though you would pay more out of pocket in case of a claim, at least you would be able to claim since you still have full coverage.

Take the time to thoroughly explore your options before making a decision. Obtain multiple quotes with varying deductible amounts and compare both full coverage and liability-only policies to determine what works best for your situation.