Generally, Collision insurance covers damage to your automobile caused by collision with another object or by upset. Comprehensive insurance covers damage to your automobile for things other than Collision so for vandalism, hitting an animal, hail damage, flood water, theft or glass breakage.
If you are making payments on your vehicle, your lien holder will usually require you carry these physical damage coverages. They require these coverages, because they cover the vehicle up to its actual cash value and until the car is paid off the vehicle technically belongs to them. However, if your vehicle is paid for, it is your choice to purchase Comprehensive and Collision coverages.
Now, some insurance companies will not sell Comprehensive coverage without the Collision coverage. And, some insurance companies will require you keep the deductible amount the same for both coverages. In order to determine if these coverages are worth purchasing, you will need to weigh the value of your vehicle against your deductible amount and the premium you will be paying for the coverages. An older vehicle that does not have much value isn't typically insured for Comprehensive and Collision coverage. If however you have a newer car and you want to protect your asset by having coverage you can place a claim against for covered accidents than you would normally want both Collision and Comprehensive on your vehicle.
Come here to get a quote for California state automobile insurance (or for automobile insurance for any other state in the United States) to compare your rates with and without full coverage of Collision and Comprehensive.
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Unlike liability coverage, both collision and comprehensive are designed to pay for damage to your own car. However, they protect your vehicle from very different things.
What is collision insurance?
Collision insurance covers damage that occurs as a result of a collision with another vehicle or object. This coverage applies regardless of who is at fault in the accident. Collision coverage will handle damage from hitting a post, tree, curb or other various objects.
What is comprehensive insurance?
Comprehensive insurance covers damage to the insured vehicle that occurs as a result of anything other than collision. This can be as a result of Mother Nature, fire or vandalism. Most insurance policies include hitting a deer under the comprehensive insurance rather than collision. This can cause confusion.
To make the difference clear, collision coverage only covers damage that occurs from other vehicles or a collision with an object. Damage from hitting any kind of an animal will fall under your comprehensive insurance coverage.
In most cases, the collision and comprehensive insurance are bundled into one package by your insurance company. It may still be possible to purchase one coverage and not the other as a way of saving money. If you have a lien on your vehicle, your lender will probably require you to have both of these covers.
What determines rates?
Auto insurance rates for collision and comprehensive insurance are affected in the same manner that liability coverage is. The age of the insured drivers, credit history and driving history can all play a role in raising or decreasing your insurance rates. Drivers under 25 are considered high risk and will likely have to pay a higher insurance premium.
Traffic violations including drunk driving will also have an impact on your collision and comprehensive insurance rates. The standard for insurance companies is to look back at the last three years of your driving record to determine the risk that is involved to insure you as a driver. The more violations and accidents you have on record, the more risk the insurance company is taking by insuring you.
The area in which you live may also directly affect your insurance rates. Some areas are known for high rates of car theft and vandalism. By living in one of these areas, the insurance company will likely increase your comprehensive insurance premium. There are also automobiles that are more commonly stolen, which will increase the risk that the insurance company will have to pay a claim on your auto insurance policy.
The insurance company will usually ask you where you work to determine your regular commute. The more mileage you put on your vehicle, the more likely it is to become involved in an accident. As a result of putting high miles on your vehicle, you may have to pay more for your collision coverage.
The value of the vehicle also has a direct impact on your insurance rate. The more it will cost the insurance company to repair or replace the vehicle, the more you will have to pay for your premium. Depending on the worth of your car, you may be able to save a minimal amount of money by deciding not to have collision or comprehensive insurance.
Am I required to have collision or comprehensive insurance?
These rules may vary by state auto insurance laws. The limited requirements by state law are usually for limited liability coverage, which does not include collision and comprehensive coverage. If your vehicle is financed through a bank or credit union, they likely will require you to have full coverage on your vehicle.
Full coverage does include collision and comprehensive. If you get into an automobile accident, the bank wants to make sure their assets are protected. If the vehicle is damaged to the point that it is not drivable, the bank has nothing to take back if you decide to not pay your bill.
If you own your vehicle free and clear, collision and comprehensive insurance are not required. It is a way for you to save money on your auto insurance policy. Depending on the worth of your vehicle and how much money you have to fix potential damages, you may want to consider getting full coverage on your vehicle.
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