Car insurance is essential to protect your car from unplanned events. Depending on various factors, you may want to pay for several coverages, such as comprehensive and collision. These are optional coverages that are easy to confuse with each other. The truth is, however, that each serves a different purpose. In this article, we’ll discuss the differences between comprehensive and collision coverage, factors to consider, and why you should have them.
Comprehensive Coverage
Comprehensive coverage, also known as “other than collision” coverage, helps you cover a portion of the cost of replacing or repairing your vehicle in the event of an external accident other than a collision. This coverage includes vandalism, natural disasters, falling objects, and theft. This means if you’re driving and a tree branch falls on your car, your policy will cover most of the cost to repair it.
However, comprehensive coverage has a limit regarding the maximum amount the company will pay for a covered claim. Typically, the maximum amount your policy covers is the current cash value of your vehicle. This is because, in the event of irreparable damage or theft, your policy can only reimburse the current vehicle cost (its depreciated value).
To recap, here are some examples of events covered under collision coverage:
- Fire.
- Natural disasters (such as hurricanes, earthquakes, and floods).
- Falling objects (such as a tree branch).
- Vandalism.
- Theft.
- Civil disturbance.
- Damage caused by animals.
Collision Coverage
Collision coverage partially pays for repairing or replacing your vehicle in the event of a collision, even if the vehicle rolls over or hits an object, such as a tree or fence. This type of coverage may be optional or required. Typically, it’s optional for owned vehicles and required for leased vehicles.
Collision coverage also has a policy limit, which is determined by the vehicle’s current value. So, the newer your car, the higher the cap. As a reminder, cars lose up to 20% of their value in the first year and 15% annually after that. So, if you get into an accident and need to replace your car, you’ll probably use your savings money to make it happen.
To recap, here are the types of damage that collision coverage can cover:
- Collision with another vehicle.
- Collision with another object, such as a fence or tree.
Note that this type of coverage only protects you and doesn’t cover damage to other vehicles.
Similarities Between Comprehensive and Collision Coverage
- Both comprehensive and collision coverage can be optional or mandatory. They’re optional if you own your vehicle and required if you lease or finance.
- The policy limits for both comprehensive and collision coverage depend largely on the current value of your vehicle.
- Both comprehensive and collision coverage exist to protect your vehicle.
- These two coverages are usually packaged together, but some companies may only offer comprehensive coverage if the vehicle is stored and not used frequently.
- Both comprehensive and collision coverages require you to pay a deductible once you make a claim.
Differences Between Comprehensive and Collision Coverage
- Comprehensive coverage is an umbrella type of insurance because it helps pay for damage due to external accidents, excluding collisions.
- As its name suggests, collision coverage is niche insurance that helps pay for repairing or replacing the damage caused by any type of collision.
- Because each serves a different purpose, having one coverage may be more important than the other. For example, if your area is known for its bumpy roads, collision coverage may be ideal because it protects you from collisions.
- Collision coverage is up to three times more expensive than comprehensive coverage.
Why You Should Get Comprehensive Coverage
Comprehensive coverage helps you save money and serves as a backup for unexpected emergencies. No matter how skilled you are as a driver, you’re always exposed to unexpected road accidents. This coverage prevents you from paying out of pocket for damage caused by external forces, such as a storm or social disturbance.
Why You Should Get Collision Coverage
As a driver, safety should be your first priority, and protection should be your second. Purchasing collision coverage is one way to do that and be better prepared for future events. This coverage also prevents you from dipping into your savings account to pay for the damage.
Factors To Consider
If you’re wondering if it’s worth having both comprehensive and collision coverage, the answer is yes. As mentioned above, you (and your passengers) are always subject to life’s unexpected events. And while these coverages aren’t life insurance, they do serve as a way to cover future expenses. Factors such as driving conditions, car value, safety needs, and the environment also play an important role in this decision.
For example, if you drive an expensive car, you know that it costs more than average to maintain and that parts and repairs are also expensive. In cases like this, it’s always a good idea to have both coverages so your insurer can help you pay for repairs or replacements if needed.
In contrast, if you live in a rural area with lots of traffic and uneven roads, you’re exposed to all kinds of car accidents, including traffic and animal collisions.
It’s important to note that if you don’t drive regularly and the roads in your area are extremely safe, getting these coverages may not be a pressing matter for you. However, it may not hurt to have comprehensive coverage.
Get Peace of Mind by Insuring Your Car
Both comprehensive and collision coverage are important for your peace of mind, especially if you’re an active driver and want to preserve the life of your car. These coverages work by helping to pay to repair or replace your car in the event of an accident. They’re not all the same, and each covers different accidents. As Chicago’s best low-cost auto insurance company, we offer a wide variety of coverages, including comprehensive and collision coverage. Even better, both are available through American Auto Insurance along with SR-22 coverage. Call today at 773-286-3500.
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