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Comprehensive and collision insurance coverage both cover drivers from damages to a vehicle, but the specifics behind each are quite different. Without car insurance, you can’t legally drive—and you’d be in quite a jam if you got into an accident or otherwise suffered damage to your car that requires expensive repairs.
While most states only require a minimum amount of car insurance, there are two optional types of car insurance that many people choose to add to their policy in order to be more fully covered. Collision and comprehensive car insurance will pay for repairs to vehicles. Understanding the difference between comprehensive vs. collision insurance is the key to getting the most effective coverage.
- What is Comprehensive Insurance?
- What is Collision Insurance?
- Comprehensive vs. Collision Differences
- Factors to Consider When Choosing Coverage
- Comprehensive and Collision Coverage: Which is the Best Option?
What is Comprehensive Insurance?
Comprehensive car insurance covers damages that arise from things other than your car driving into another vehicle or object; this might include a tree falling on your car, a broken windshield from a rock, a fire, vandalism, or damage from a natural disaster such as a storm or tornado.
Comprehensive car insurance policies also typically include damage that results from acts of terrorism. However, the language on these types of policies is usually very vague when it comes to acts of terrorism, so it may be difficult to file a claim.
What is Collision Insurance?
Collision insurance covers damage to your car that results from a crash, such as an accident with another vehicle or hitting a structure, such as a tree, telephone pole, or house. Most car accidents would be covered under a collision insurance policy.
The main benefit of a collision car insurance policy is that you can file a claim and be reimbursed regardless of fault. In contrast to other types of claims, collision claims are typically processed quickly because the insurance company does not have to determine fault.
In addition, policyholders can file a claim directly with their own insurance company. This type of coverage can also be used for rental cars.
Comprehensive vs. Collision Differences
The major difference in comprehensive vs. collision insurance is how the damage was caused. For collision car insurance, the damage must have been caused by the vehicle striking another object—either due to the insured’s actions or the fault of another driver.
In contrast, comprehensive car insurance covers losses that arise from “acts of God” or nature that are entirely outside the control of the driver and other drivers—such as hailstorms, falling tree branches, and even car thefts.
To illustrate the difference between collision coverage and compressive coverage, consider the following situation. You are driving during a massive rainstorm when a branch falls from a tree, smashing the front end of your car. Because that was an act of nature—and completely outside of your control—it would be covered by your comprehensive insurance policy.
However, if you saw the tree branch dangerously swaying in the wind and rain and swerved at the last minute to avoid it, crashing into another vehicle in the process, the resulting accident would be covered by your collision coverage. Although the falling tree branch was out of your control, you chose to swerve to avoid it and hit the other vehicle, making the accident coverable under your collision policy.
Factors to Consider When Choosing Coverage
When deciding on collision vs. comprehensive coverage, there are a number of factors that you should consider. As a general rule, most drivers should have both types of coverage to fully protect themselves and their vehicle.
This is particularly true if their car is leased or financed, less than 10 years old, or worth more than $3,000. Many lease and finance agreements require that the vehicle owner carry both comprehensive and collision insurance coverage.
However, if your car is worth less than $3,000, buying both comprehensive and collision coverage may mean that you are paying more in insurance premiums than your car is worth. Obtain the estimated value of your car from a trusted site like Kelly Blue Book or Edmunds to determine if having coverage is a smart financial bet.
Comprehensive and Collision Insurance: Which is the Best Option?
As discussed above, choosing the best car insurance for your vehicle will depend on a number of factors, including the age and value of your car. It will also vary based on your financial situation, including your ability to pay for repairs compared to your ability to absorb the cost of higher insurance premiums.
Generally, collision claims tend to cost more than comprehensive claims. However, comprehensive insurance is far less expensive than collision insurance at approximately $200 per year (as opposed to $400 or $500 for collision insurance). Because comprehensive insurance has broader coverage, including for theft, it may be a better value for those looking to save money on car insurance.
Car insurance can be expensive, which is why some vehicle owners choose to buy the minimum amount necessary to comply with state law. This may be a good choice for those trying to save money, but it can cost more in the long run if they have an accident or otherwise suffer damage to their car.
Other car owners may choose to get the maximum insurance available, including collision and comprehensive coverage, to fully protect their investment in their car. Whatever you choose, knowing the various types of car insurance can help you make a smart decision.
Author: Jeff Gitlen