According to Business Wire, it’s estimated that 96% of American drivers don’t understand their car insurance policies. That’s pretty surprising considering the amount of time we spend in our cars and the high monetary value of our vehicles. At Ianniello Agency, we want our customers to understand their policies and feel confident with their coverage, so we’re going to spend some time in this blog post breaking down a question we come across a lot: What’s the difference between collision and comprehensive coverage?
What is Collision Coverage?
Collision coverage helps repair or replace your car if you are in an accident with another vehicle. It also covers accidents with objects, like a lamp post. Additionally, if a driver hits your car and doesn’t have enough insurance to cover the cost of your repairs, your collision coverage steps in to cover the remaining costs.
Do I Have to Purchase Collision Coverage?
Collision coverage is optional if you own your car outright. However, lenders normally require collision coverage for any vehicles that are financed or leased to protect their investment.
How Does Collision Coverage Work?
When you sign up for collision coverage, you choose a deductible. For example, your plan might have a deductible of $500. If you get into an accident and the repairs cost $1,500, you will pay $500 towards the repairs, and your auto insurance company will cover the remaining $1,000.
When choosing a deductible keep in mind the lower the deductible, the less you’ll pay out-of-pocket if you file a claim. With that being said, your monthly car insurance premium will be higher. The reverse is true too. If you select a higher deductible, it may mean your monthly premium is less, but you’ll pay more if an accident occurs.
What is Comprehensive Coverage?
Comprehensive coverage takes your auto policy to the next level of protection. It covers damage caused to your vehicle outside of collisions with other vehicles or objects. Some examples of potential accidents include:
- Theft
- Vandalism
- Hail damage
- Glass or windshield damage
- Falling objects like tree branches
- Fire and explosions
- Accidents with animals
You can see how comprehensive coverage is beneficial if you live in high crime areas, locations with extreme weather, or in the country where you come across wildlife like deer. Don’t forget these accidents can happen anywhere though! It’s better to be prepared.
Do I Have to Purchase Comprehensive Coverage?
No, you do not have to purchase comprehensive coverage if you own your vehicle. Those who lease or finance their cars most likely will be required by lenders to purchase it.
How Does Comprehensive Coverage Work?
Just like collision coverage, you select the deductible you are comfortable with. If there is an event covered by your plan, you pay the deductible, and your insurance covers the rest of the repair or replacement.
The same holds true regarding your deductible. The lower the deductible, the less you’ll pay towards the repair, but you’ll face a higher monthly premium. Choose a higher deductible and your monthly payment may be less, but you’ll pay more in the case of an accident.
What is the Difference Between Collision and Comprehensive Coverage?
The main difference between collision coverage and comprehensive coverage is that collision coverage only protects you in the event of an auto accident with another driver or inanimate object, like a fence. Comprehensive coverage looks at accidents that happen for a variety of other reasons outside of your control like damage caused by weather, animals, or theft.
Another difference is the cost of coverage. Collision insurance often costs more because accidents involving other cars happen more frequently.
Do You Need Both Collision and Comprehensive Coverage?
Neither collision or comprehensive coverage is required by law. However, lenders normally require it for those leasing or financing a vehicle to protect their investment.
Both collision and comprehensive coverage generally make sense for drivers because they help protect your financial investment in a vehicle. If or when an accident happens, you can rest knowing you’ll only owe the cost of your deductible for covered events. Your insurance will step in to take care of the rest, leaving you off the hook for the cost of major repairs or vehicle replacement.
What If My Vehicle is Old? Do I Still Need Collision Coverage and Comprehensive Coverage?
Both collision and comprehensive coverage cover you up to the current cash value of your vehicle. If your vehicle is old and doesn’t have a high value, you may choose not to purchase collision or comprehensive coverage to save money on your monthly premium. This is still risky if you plan to continue to use the car for the foreseeable future. If you get in an accident, you will pay for the full cost of the repairs or replacement without this coverage. A better option might be to reevaluate the level of coverage and lower it if you have an aging vehicle.
Auto Insurance with Ianniello Insurance Agency
If you are considering collision and/or comprehensive auto coverage – give us a call! We would be happy to help you figure out what fits your vehicle, lifestyle, and budget. Contact us today or request a quote here.
