If you live in a place where it snows, rains, or hails, your vehicle probably needs some sort of protection from the elements. Whether that comes in the form of a car cover or through comprehensive coverage, knowing the difference between collision and comprehensive insurance coverage is crucial to understanding your insurance policy.
1. What is Collision Coverage?
Collision coverage will pay to repair or outright replace your vehicle after an at-fault accident. It’s important to note that collision coverage doesn’t actually pay for repairs- it only kicks in after your insurance company has agreed that another driver is at fault and settles with you.
2. What is Comprehensive Coverage?
Comprehensive coverage pays out if your vehicle is stolen or damaged by something other than a car accident, such as weather or fire. Like collision coverage, comprehensive coverage won’t pay for repairs; instead, it will reimburse you after the insurance company determines that there is no fault in your accident.
3. Which Should You Have?
If you purchased your vehicle outright, collision coverage is probably a good bet for you because it only kicks in after an accident. A lot of creditors will require this before they’ll give you a loan on a vehicle, too.
4.What makes Comprehensive Coverage so expensive?
There are a few factors that make comprehensive coverage more expensive than collision, and most of those factors can be reduced or removed by better driver behavior. The first is the element of risk: because there is no one else at fault in an accident, you won’t receive any payout from another driver’s insurance company until your own is satisfied. Secondly, comprehensive coverage tends to have a deductible- generally equal to the cost of fixing the car after an accident. This means that in order to receive a payout from your insurer for damages to your vehicle, you will need to pay the deductible first. Most people only carry one deductible at a time, but if you already have collision coverage, you might be able to double it.
A deductible is the amount of money that must be paid out of pocket before your insurance company begins making payouts. For example, if your deductible is $1,000 and your windshield needs to be replaced after a rock hits it, you will have to pay for the full cost before your insurance company kicks in.
5. How can I save money?
You can lower the costs of both comprehensive and collision coverage with good driving behavior. If you maintain a perfect driving record, then your insurance company will reward you with a discount. If you have the money, it’s also good practice to increase your deductible if it doesn’t exceed more than 2-3% of your annual salary. This lowers the risk you present to your insurer and may be rewarded with a lower rate.
Another way to save money on your insurance is to keep track of your vehicle mileage. Your insurer will reward you if you drive less than 7,500 miles in a year. Even though good driving doesn’t lower your comprehensive and collision rates, it does reduce the risk that your insurer will have to pay out in the future.
The five main differences to keep in mind between comprehensive and collision coverage are:
1. Collision coverage kicks in after an accident, Comprehensive coverage kicks in when there isn’t another driver at fault.
2. Collision coverage pays for repairs, Comprehensive coverage reimburses you after your insurance company settles with you.
3. If purchased outright, Collision coverage is probably a good bet.
4. Comprehensive coverage has a higher risk of not having payout from another driver and has a deductible (generally equal to the cost of fixing your car after an accident).
5. Good driving behaviour can lower rates for both comprehensive and collision coverage, but if you have the money try raising your deductible to pay less out of pocket and have a better driving record for discounts.
All in all, Collision coverage is more expensive, but it’s better to have this in case of an accident. Comprehensive covers the weather and fire damage. Driving behavior can help with these rates. Keeping track of mileage can help even more than driving well. Always check your policy and make sure you understand what the coverage means. If you’re not comfortable with what you have, call your insurance company to discuss it. Many drivers don’t know what is and isn’t covered until they’re in an accident. All drivers should know what their insurance policy covers and that is what they will pay for in case of an accident. It is still surprising to learn that most of us drivers are fully aware of what our policy covers or does not cover in detail. Safe driving and remember to shop around for the best options suited to your driving needs. If you’re not comfortable with what you have, call your insurance company to discuss it.