call

What You Should Know About Comprehensive vs Collision

Fran
Dani Milton February 4, 2021

Collision vs Comprehensive Coverage

Collision insurance and comprehensive insurance are optional coverages that pay to repair damage to your car after an accident or another incident. If you are financing a vehicle, a lender will require you to carry collision insurance and comprehensive insurance for the length of the loan. After the loan is complete, it is up to you whether you want to continue collision and comprehensive insurance for your vehicle.

Collision coverage helps to repair damage to your car or to replace the car if it is damaged in an accident with another vehicle or object such as a fence or a tree or guardrail. Collision coverage pays for the damage to your car regardless of who is at fault in an accident. 

Comprehensive auto insurance covers events that aren't covered by collision insurance. These events include fire, theft, vandalism and damages from weather such as a hailstorm, a windstorm, a tornado and a hurricane. Here are more details about collision insurance and comprehensive insurance.

What Is the Difference Between Comprehensive Insurance and Collision?

Instead of thinking about the difference between comprehensive and collision, it's easy to think of them as one big car insurance package. Some insurance companies won't sell you one without the other. Collision protects you if you are at fault in an accident with another vehicle or an object. Comprehensive coverage protects you from fire, theft, vandalism and damages from the weather.

Full Coverage vs Comprehensive and Collision Coverage

Liability insurance pays up to limits for other people's injuries and property damage if you ever cause a car crash. Most states have liability requirements for the drivers in their state.

What is full coverage auto insurance? Full coverage is your state's minimum liability requirements plus comprehensive and collision coverage. Full coverage also may include other state minimum insurance requirements such as uninsured and underinsured motorist coverages and personal injury protection.

Comprehensive vs Collision Deductible

A deductible is an amount you need to spend before your auto insurance company pays for damage to losses on a vehicle.

If your car insurance company requires you to buy collision coverage and comprehensive coverage together, you may have a shared deductible but usually, comprehensive and collision coverage are two separate insurance coverages with their own deductibles.

You should choose a comprehensive deductible based on how much you could afford to pay out of your own pocket if a claim was made. Let's say you have a $500 deductible and your car is stolen. You would get a claims check for the covered value of the car minus $500.

But if you choose a higher deductible amount, say $1,000, you would save money on your auto insurance premium. With a bigger deductible, you get immediate savings on your insurance premium. With a lower deductible, you pay more on your premium but less should you file a claim. 

The deductible with collision coverage works the same way. Think about what collision coverage entails. It pays when you have a collision with another vehicle or object such as a tree or fence if you should lose control of the car.

Does spending $500 make sense to you if your car is wrecked? Or do you have enough in savings to cover a $1,000 deductible? You may wish to choose a $1,000 deductible to save money on your insurance premium. If you are more comfortable with a $500 deductible, know that you're paying more in premium.

Find Affordable Car Insurance

All Perils vs Collision and Comprehensive

All perils car insurance is another way to describe comprehensive auto insurance. All perils car insurance covers things such as theft, fire and vandalism and damages from weather such as hail. All perils car insurance also covers damage not covered in all perils coverage for your home. Those events include earthquakes and floods.

All perils car insurance differs from collision coverage. All perils car insurance covers damage from weather and things like fire and vandalism.

Comprehensive vs Collision Claims

If you need to file auto insurance claims, here's how.

Step one 

Reach out to your auto insurance company in person, online, by mobile app or by calling an 800 number for claims.

Step two 

Now is the time to connect with a claims representative, who will review your claim and contact you if he or she needs any additional information from you. The claims representative will answer any questions you have about the claims process.

Step three 

This is when an evaluation of the claim takes place. A claims representative will determine whether your loss is covered and gather all relevant information on your damage or injury. This investigation typically includes studying documentation, interviewing witnesses, obtaining photos and estimating vehicle damages.

Step four 

You'll get an estimate for the repairs from the repair shop, one selected by the insurance company or one picked out on your own. 

Step six 

The insurance company pays for repairs of damage to your vehicle. They can pay the repair shop, directly deposit the money into your bank account or send you a check. Payment for medical bills associated with your auto claim will be made according to your auto insurance policy and according to the laws in your state. If your auto damages are not covered by your policy, a letter will be sent explaining why.

Step seven 

When a claim has been resolved according to the terms of your auto insurance policy, the claim is considered closed. Make sure you understand every part of your insurance claim.

Liability vs Collision vs Comprehensive

Liability insurance pays for other people's injuries and property damage up to your liability limit if you are ever at-fault in an accident. Collision coverage helps to repair damage to your car or replace your car if it is damaged in an accident with another vehicle or object such as a fence, a tree or a guardrail. Comprehensive coverage protects in events such as fire, theft, vandalism and damages from weather.

Let's say you have liability insurance, comprehensive and coverage. Now let's say you are at a stop sign and you rear-end the other vehicle. The damages to your vehicle would be covered by your collision coverage. Let's say you had $500 deductible. If it was a $2,000 claim, you would get a $1,500 claim check to be used for repairs. 

Now, consider this scenario. Your almost, brand-new car gets stolen from a parking garage. In this case, your comprehensive coverage would cover the theft of your car, minus your deductible of $500. So you would get back the current value of the car minus $500 in your claim check.

Here is another example. You come back from dinner to discover that your car has been vandalized. You are able to drive the car home and promptly make a claim for vandalism to your insurance company. Your comprehensive coverage includes vandalism and you'll get a claim check for the damages minus your deductible, which is $1,000.

What's Not Covered by Comprehensive and Collision

Collision insurance and comprehensive coverage do a lot for your car should an accident happen, theft, fire or vandalism strike or damages from weather. But there are a lot of things they do not cover. These include medical bills for you, your passengers, the other driver and his or her passengers, lost wages, funeral costs, property damage and legal expenses. You need other insurance coverages to cover those items. Comprehensive and collision coverages are focused on the repair or replacement of your damaged car. Anything else is not covered.

What Are the Costs of Comprehensive and Collision Insurance?

The national average for a six-month policy with comprehensive coverage is $80, according to the National Association of Insurance Commissioners (NAIC). And the national average for a six-month policy for collision coverage is $181.50, also by the NAIC.

These examples show the costs covered by comprehensive and collision coverage:

Let's look at a scenario where you are in a serious accident with $20,000 worth of losses to your new car and you are also at fault for the accident. It was at night and you didn't see the other car until it was too late. You are at fault and your liability insurance will help pay for the medical bills of the other driver and for the property damages to their car. The $20,000 worth of damages to your own car is covered by collision insurance. Collision would pay for the accident claim, minus a deductible, which is $1,000. Without collision protection, you would have to pay for repairs out of your own pocket.

Here is another scenario. You are attending a meeting in another part of town and when you come out you realize your car has been stolen. You call the police to report the theft and the next call you make is to your insurance company to file a claim. You have comprehensive coverage and theft is covered by your insurance. You will get a claim check for the current value of the car. Without comprehensive coverage, you would have to buy a new car with your own money and savings. Instead, with comprehensive insurance, you are covered for the loss.

Factors to Consider in Buying Comprehensive and Collision Insurance

The maximum payout for collision and comprehensive coverage is limited by the value of the car. So if your older car has a low market value, it may not make financial sense to carry collision and comprehensive coverages any longer.

Wondering if collision and comprehensive is worth it for your older car? The Insurance Information Institute suggests taking the amount you pay in one year for comprehensive and collision coverages and multiply that number by 10. If your car is worth less than this number, collision and comprehensive insurance coverages may not be worth the cost.

Here's an example. Let's say you pay $500 for collision and comprehensive insurance coverages each year. Multiplying that number by 10 and you would get $5,000. The car's current value is $3,000. Because $3,000 is less than $5,000, it would be wise not to spend money on collision and comprehensive insurance coverages any longer.

How Much Collision and Comprehensive Coverage Costs?

A recent survey by SmartFinancial found the average cost of comprehensive coverage to be $123 per year and the average cost of collision protection to be $491 per year. Costs varied widely from insurance company to insurance company.

It is important to shop around to get the best deal. SmartFinancial makes this easy to do. With SmartFinancial's help, you'll be comparing insurance rates from companies near you in no time. And because SmartFinancial has access to more than 200 insurance companies you are bound to find the coverage and price that you want. Start by entering your zip code below. The service is entirely free.

Get a Free Auto Insurance Quote Online Now.

Related Articles

Auto Insurance 12 Things You Can do to Lower Your Auto Insurance Premium

There are some very specific things a driver can do to impact the rate they are paying for auto insurance.

Auto Insurance Why Do Car Insurance Quotes Change Daily?

When calculating auto insurance-related policies, car insurance companies are reckoning on how much they will have to pay on all claims for the year.

Looking for Auto Insurance?

Compare rates from dozens of companies in less than 3 minutes.