Collision vs. Comprehensive Coverage

You’re trying to save money on your automobile insurance, so you look at the coverages your agent is suggesting you buy. Some things are must-haves; liability coverage, for instance, is required by every state in some form, though the minimum coverage levels vary. That’s to make sure you can pay for injuries or property damage if you cause a wreck.

Meanwhile, some coverages are optional (at least in some states), such as uninsured/underinsured motorist coverage. But they really aren’t so optional: If you’re hit by a motorist who either has no insurance or doesn’t have enough or if you’re the victim of a hit-and-run driver, you could wind up on the hook if you’re injured of suffer damage to your vehicle. The gamble is too great for most people to let this one go.

Some coverages are optional and easy to turn down: Rental car reimbursement and roadside assistance are two that you can probably decline with minimal consequences.

But there are two other coverages suggested by your agent that may have you wondering. What are collision and comprehensive coverage? Do you need both? Do you need either? Following is the rundown:

Comprehensive

Oh, if it only lived up to its name. Comprehensive coverage protects you against a number of things that could happen to your car, including the following:

• You hit a deer or some other animal. You won’t believe how much damage it can do – until you’re stuck paying for it.
• Your car is damaged by hail or other extreme weather. This includes being flooded.
• Someone steals your car, or vandals deface or otherwise damage it.
• Your windshield is chipped or cracked by a rock. Many chips can be repaired at your home or workplace with no deductible. Yes, comprehensive coverage has a deductible – an amount you pay out of pocket when you file a claim. In general, the higher your deductible, the lower your premium.

You might have noticed that there’s something missing. Comprehensive coverage protects you if you hit an animal, or if a hit-and-run driver crashes into you. But what happens to your car if you cause a wreck with someone else? That’s when you need …

Collision

Collision coverage helps pay to repair your vehicle when you are at fault in a wreck. That makes it pretty invaluable to most motorists – no matter how well they believe they drive. Again, there is a deductible, and again, the higher the deductible, the lower the premium.

Collision also can be used in other circumstances: Say you damage your car by hitting a pothole, for example. It also could help pay for repairs if you slide on an icy road and hit a tree or if you become distracted, run off the road and hit that tree.

So what’s the bottom line? Should you get comprehensive and collision protection, or can you skip one or the other? The answer might not be in your hands. If you don’t own the car outright, your lender likely will require you to carry both to protect its investment.

If you’ve paid off the car, then you can decide. It could hinge on the value of your car. If it is 10 years old or older, it might not be worth having the collision or comprehensive – once you come up with the deductible, there might not be much left to pay out.

Comprehensive and collision coverage can help you, but neither by itself will keep you protected in all situations. In most cases, you should have both, understanding that there is a point in the car-ownership timeline when you can – and probably should – opt out.

Source: AutoInsurance