What is Collision vs. Comprehensive Car Insurance?

You are in the market to purchase auto insurance for your car, and you find yourself sorting through an email box filled with auto insurance advertisements. However, before you purchase auto insurance, there are several elements you should know about collision and comprehensive coverage options that will help you make the right decision.

In short, collision and comprehensive car insurance coverage options provide you with a financial safety net should your vehicle ever suffer physical damage and need repairs or replacement. These types of coverage options are generally not required by state laws and are optional.

However, if you are financing an auto through a bank or other car loan company, the financial institution will require both collision and comprehensive coverage policies. However, whether you own your automobile outright or are still paying the bank, having insurance coverage that will replace or repair your vehicle is always good financial advice.

Collision coverage

Collision coverage, as it implies, provides a means to pay for damage repairs, or even replace your car altogether, in the case of a collision with another vehicle or object while you were driving the car.

Your premium for this coverage is based on a number of factors. One is the deductible you wish to choose. A deductible is an amount that you agree to pay out of your pocket before the insurance company picks up the rest of the tab. A higher deductible puts you at higher financial risk, but lowers your premium considerably. Conversely, a lower deductible will require you to pay more each month on premiums.

Another factor is your driving record. Are you a safe driver? Or do you have previous accidents and speeding tickets on your driving record? If the insurance company sees you as a higher risk for collision damage, you'll pay for it in premiums.

Do you need this coverage? If you fully own and drive an older vehicle that is out of shape and has very little replacement value, you may not want to pay for this coverage.

Comprehensive coverage

This auto insurance coverage will pay for damage to your vehicle caused by events other than an accident, such as hail, flood, vandalism, or theft. As with collision, comprehensive premiums are calculated based on the amount of deductible you wish to accept.

Insurance claims for comprehensive damage can be tricky. Review your policy carefully for exceptions and limitations. Insurance companies like to "limit" claims, or deny them altogether, for certain "acts of God" or other types of damage from weather that is conducive to the area in which you live. Knowing beforehand your limitations can prevent headaches and heartbreaks when it comes time to make a comprehensive insurance claim.

Your car insurance coverage policies play a large part in how your insurance premiums are calculated. Be sure to know what coverage options you want in regards to comprehensive and collision damage before you buy an insurance policy.

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