As you shop for auto insurance, there are three important terms you should know. The first is liability insurance, which is something everyone needs. In fact, you can’t legally operate a vehicle without liability insurance. Essentially liability protects you from any accident where you’re to blame, and it helps pay for any damages other drivers or property owners sustain. Just carrying liability insurance on your vehicle is the cheapest option, but beware this coverage will not help you pay for any damage sustained to your car. This is where additional auto insurance coverage options come in, namely comprehensive vs. collision. Let’s take a closer look at both options and see if one or both are right for you.
Comprehensive Auto Insurance
Comprehensive auto insurance is all about “what may happen” when you’re not driving your car. This can include instances like hailstorms damaging your car or a tree branch falling on your vehicle during a storm. Events like fires, vandalism, theft, animal collisions and any other act from an outside party that damages your car (again that does not involve another motor vehicle) is typically covered under a comprehensive policy. It’s easy to see there are a lot of benefits in comprehensive insurance. This is a policy that most auto owners will want to have, especially if they are driving a vehicle with significant value. After all, you never quite know when you’ll get caught in that hail storm or other unpredictable event. Damage sustained from these “Acts of God” can sting all the more since you know your liability insurance isn’t going to cover it. Unless you’re driving a vehicle with very low value, comprehensive insurance is something you’ll want to add to your policy.
Collision Auto Insurance
While comprehensive deals with anything outside of an automobile accident, collision insurance covers with anything that happens while you’re driving your car. Essentially we’re talking about you crashing into someone or another vehicle crashing into you (for circumstances when the other driver’s liability doesn’t cover the accident). Crashing into fixed objects like street signs, embankments or similar objects is also covered under collision. Drifting into a ditch or sustaining damage from a large pothole are other circumstances that are covered under a standard collision policy. The true benefit of collision insurance is there is no worry who is at fault. Even if it’s your fault you hit something and damaged your car, you can file a claim. Many collision policies also cover rental car damage, which is a bonus if you regularly rent a car. Not everyone will add collision insurance to their auto policy, but it can certainly help should you get into an auto accident.
Comprehensive vs. Collision
The best way to differentiate comprehensive vs. collision insurance is to remember one involves moving accidents and the other doesn’t. Collision involves only situations where you “collide” with other fixed objects or vehicles. Comprehensive essentially covers anything else that could happen to your vehicle outside a collision. In addition, remember there are times where another driver’s liability insurance will cover damage from an accident and neither your comprehensive nor collision coverage will come into play. So how do you decide what to choose when it comes to comprehensive vs. collision? Let’s take a closer look.
What Do You Need?
What are your individual needs and what should you add regarding comprehensive vs. collision? Just as importantly, what does each option generally cost? First thing is first, you’re going to need liability coverage no matter what. Secondly, if you’re leasing your car, part of the terms of the lease is that you carry both comprehensive and collision on the vehicle for the life of the lease. For many auto owners, this makes the decision pretty simple. However what if you’re not leasing your vehicle and own it outright? If it’s a reasonably valuable vehicle, even above $2500 or more, it’s probably not a bad idea to carry both comprehensive and collision. The financial aspect of losing a vehicle you depend on with no money to cover the loss can be devastating to some insurance customers.
If you absolutely need to cut down your auto insurance premiums, then collision can be dropped from some policies without impacting the customer too much. This is especially true if the owner has a good driving record, but don’t forget accidents can still happen. Comprehensive on the other hand covers a lot of unknown circumstances. For example if your vehicle is stolen or totaled beyond repair, you’ll receive no financial compensation. This can be a tough pill to swallow when you have to go out and buy a new car with your savings. In this way it can be argued that comprehensive insurance is must-have right alongside liability coverage.
Which Is The Most Expensive?
When it comes to pricing, liability is the cheapest coverage. This makes sense as liability is never going to cover anything that falls under a comprehensive or collision policy. Next, adding comprehensive coverage will raise your rates, but this option is more affordable than collision insurance. There is a good reason for this. Remember as we outlined earlier, collision insurance is not based on who is liable. As long as the collision claim is valid, the insurance company will pay out the claim, which makes this option the most expensive. Even so, if you’re driving a vehicle worth $15,000 – $20,000 or more, the risk of dropping collision to save a few dollars on your premiums is simply not worth it.
Still Have Questions?
Still have questions regarding comprehensive vs. collision insurance? Maybe you need a detailed breakdown on how each coverage will impact the cost of your monthly insurance premiums. Square State Insurance can help. Contact us to learn more about your options, or go ahead and start a free auto insurance quote to get exact pricing figures.