Understanding Comprehensive and Collision Insurance for Your Vehicle

A car is an expensive commodity, so getting it insured makes sense. In many states it’s the law. Insurance coverage helps cushion you from financial loss or claims for damages your car sustains in case of a collision or accident. What is covered and how much is covered, however, depends on the insurance policy you buy.

It is important to understand that most auto liability insurance policies required by state law cover bodily injuries, property damages, and uninsured or underinsured motorists. Liability coverage does not protect you or your car. That’s where comprehensive and collision coverage come in. Though these are separate, they work hand-in-hand to cover your losses and help you repair your car.

Comprehensive Coverage

Comprehensive coverage, also known as ‘other than collision’ coverage, is an optional insurance coverage for car owners. Simply put, it covers repairs that are not related to collision with other cars due to driver error.

This coverage protects you and pays for car repairs that may occur due to fire, falling objects, natural disasters, vandalism and theft. Since a driver has no control over natural disasters or a deer coming onto a road, for example, these kinds of accidents are also reimbursed under comprehensive.

Comprehensive coverage pays for car repairs as long as the cost associated with repairs does not exceed the car’s actual cash value at that time. The ‘actual cash value’ is the original purchase less depreciation.

Collision Coverage

Collision coverage pays for repairs in the event of an accident with another vehicle or a stationary object like hitting into a fire hydrants or a streetlight. Most accidents fall under this insurance policy, which covers the cost to repair the car. However, in order to add this coverage to your policy, first it is required that the policyholder has comprehensive coverage.

Leasing Exception

In comparison to standard car buying, individuals who lease must add both comprehensive and collision coverage to their liability auto insurance policy, as mandated by law.

Discounts

Age, gender, number of drivers, annual mileage, and the safety features in the vehicle are just some of factors that determine what discounts are available and the amount. Be sure to ask your insurance company and agent about this. Compare companies when you buy a new or used car; the premiums can vary greatly.

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