What Is Collision and Comprehensive Coverage?
Collision and comprehensive insurance coverage are separate types of insurance that can be added on to your auto policy.
It can be confusing sometimes trying to figure out what each coverage is responsible for and how much it costs if something happens, but I will try to explain what each means and can do in certain instances.
Collision coverage can be purchased and added on to your car insurance policy and will pay for any damage that happens to your car if you involved in an accident and found at fault.
So, if you were driving home, swerved to avoid hitting an animal, but ended up crashing into a tree, then this is where collision coverage would come in.
Your insurance company would reimburse you fully for the amount of damage up to the policy limit, and minus the deductible.
The deductible amount is up to you, and the higher amount, the lower the cost of the policy, but we will discuss this a little later.
It is also important to note that the insurance company will not pay for any repairs or reimburse you for a totaled car until the deductible is paid.
Collision coverage can be a very good policy to own, especially if you own a new car (many auto loan companies will even make you buy this insurance coverage).
Many people feel that since they never get into accidents, then the policy is not needed, but all it takes is a one time mistake.
I would also suggest that this coverage be purchased only if it makes sense financially.
What I mean by this is there is no point in buying these types of coverage if your cars value is very little.
If this is the case, you will most likely pay an insurance company more than the value of the car before you ever need to use the policy.
Some say a good rule of thumb is if the car is over ten years old, don't worry about the coverage, but this will also depend on the type of vehicle.
Comprehensive coverage, on the other hand, covers just about anything else that can possibly happen to your vehicle.
Comprehensive insurance coverage should also be purchased with a new car and also should be taken off when the cars value depreciates significantly.
But what does it cover? Well, it covers a multitude of incidents from vehicle theft, to damage done in riots, to damage done in a war zone, there is almost no situation where your vehicle is not covered.
It also covers weather events, such as hail storms and tornadoes, but it is also important to talk to an agent/broker to see what is not covered, as it may vary from company to company.
Comprehensive insurance is a great policy to have with newer or valuable vehicles as just about the only thing this coverage does not cover is an accident that is your fault.
Again, it is common to see many people drop this coverage after a period of maybe ten years or so, when the value of the car does not warrant that type of coverage.
When it comes to deductibles, it is very important to understand what they are and what needs to be done if you plan on filing a claim.
A deductible is the amount of money that you pay first to a repair shop then the insurance company will pay the rest, up to policy limits.
It is popular for many people to have a high deductible amount of $1000 because the cost is not very high compared to a deductible of $250.
For this reason, you need to be careful when choosing a deductible amount.
If you go with the higher amount, I would strongly suggest that you keep the deductible amount in the bank in case you ever need it.
It is no fun when your car is wrecked, but you cannot get it repaired or replaced because you do not have enough money to pay the deductible amount.
With collision and comprehensive coverage, deductibles need to be chosen with much thought.
If there are any questions, talk to your insurance agent/broker to see what can be done, or what your options are.
These can be great add-on policies, but if they are not needed, they can take away a large amount of money for no good reason.
It can be confusing sometimes trying to figure out what each coverage is responsible for and how much it costs if something happens, but I will try to explain what each means and can do in certain instances.
Collision coverage can be purchased and added on to your car insurance policy and will pay for any damage that happens to your car if you involved in an accident and found at fault.
So, if you were driving home, swerved to avoid hitting an animal, but ended up crashing into a tree, then this is where collision coverage would come in.
Your insurance company would reimburse you fully for the amount of damage up to the policy limit, and minus the deductible.
The deductible amount is up to you, and the higher amount, the lower the cost of the policy, but we will discuss this a little later.
It is also important to note that the insurance company will not pay for any repairs or reimburse you for a totaled car until the deductible is paid.
Collision coverage can be a very good policy to own, especially if you own a new car (many auto loan companies will even make you buy this insurance coverage).
Many people feel that since they never get into accidents, then the policy is not needed, but all it takes is a one time mistake.
I would also suggest that this coverage be purchased only if it makes sense financially.
What I mean by this is there is no point in buying these types of coverage if your cars value is very little.
If this is the case, you will most likely pay an insurance company more than the value of the car before you ever need to use the policy.
Some say a good rule of thumb is if the car is over ten years old, don't worry about the coverage, but this will also depend on the type of vehicle.
Comprehensive coverage, on the other hand, covers just about anything else that can possibly happen to your vehicle.
Comprehensive insurance coverage should also be purchased with a new car and also should be taken off when the cars value depreciates significantly.
But what does it cover? Well, it covers a multitude of incidents from vehicle theft, to damage done in riots, to damage done in a war zone, there is almost no situation where your vehicle is not covered.
It also covers weather events, such as hail storms and tornadoes, but it is also important to talk to an agent/broker to see what is not covered, as it may vary from company to company.
Comprehensive insurance is a great policy to have with newer or valuable vehicles as just about the only thing this coverage does not cover is an accident that is your fault.
Again, it is common to see many people drop this coverage after a period of maybe ten years or so, when the value of the car does not warrant that type of coverage.
When it comes to deductibles, it is very important to understand what they are and what needs to be done if you plan on filing a claim.
A deductible is the amount of money that you pay first to a repair shop then the insurance company will pay the rest, up to policy limits.
It is popular for many people to have a high deductible amount of $1000 because the cost is not very high compared to a deductible of $250.
For this reason, you need to be careful when choosing a deductible amount.
If you go with the higher amount, I would strongly suggest that you keep the deductible amount in the bank in case you ever need it.
It is no fun when your car is wrecked, but you cannot get it repaired or replaced because you do not have enough money to pay the deductible amount.
With collision and comprehensive coverage, deductibles need to be chosen with much thought.
If there are any questions, talk to your insurance agent/broker to see what can be done, or what your options are.
These can be great add-on policies, but if they are not needed, they can take away a large amount of money for no good reason.
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