What You Should Know About Comprehensive vs Collision

Fran
Lucy Lazarony
February 4, 2021

Collision insurance and comprehensive insurance are optional insurance coverages that pay for repairs on your car if it should be damaged in a car accident or other incident. If you are financing a car, a lender will require you 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 insurance is coverage that helps to repair or replace your car if it is damaged in an accident with another vehicle or object such as a fence or a tree or guardrail. Collision insurance pays for this coverage 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 Comprehensive Insurance vs Collision?

Because car lenders require you to get collision insurance and comprehensive insurance when financing a car, it is easy to think of collision insurance and comprehensive insurance as one big package of insurance. And indeed, some insurance companies won’t sell you one without the other. But they are separate insurance coverages. Collision is all about protecting you from collisions that happen with your car from another car or from an object such as a tree or fence. Comprehensive protects you from fire, theft, vandalism and damages from weather. So they are very important but different coverages.

Full Coverage vs Comprehensive and Collision

If you ever cause a car crash, liability insurance pays for other people’s injuries and property damage up to your liability limit. 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 coverages. Full coverage also may include other state minimum insurance requirements such as uninsured and underinsured motorist coverages and personal injury protection.

Because the core components of full coverage are liability and collision and comprehensive, many people may not realize they have full coverage. They are simply obeying state laws for liability and they may be financing a car so they have collision and comprehensive coverages as well. But the combination of liability and collision and comprehensive does mean you have full coverage for your auto insurance.

Comprehensive vs Collision Deductible

A deductible is the amount you need to pay before your auto insurance company begins to pay for damages to your car or losses.

If your insurance company requires you to buy collision insurance and comprehensive insurance together, you may have a shared deductible for the two insurance coverages. Check with your insurance company to see. In general, collision insurance and comprehensive insurance are 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 there is even more to think about. If you choose a higher deductible amount, say $1,000, you would save money on your auto insurance premium. But you would pay more with the $1,000 coming out of your claims check should a claim happen. 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 a claim take place. So weigh the pros and cons carefully.

The deductible with a collision coverage works the same way. Think about what collision coverage entails. It covers collisions with other vehicles and objects such as a tree or fence if you should lose control of the car. How likely are these kinds of accidents likely to occur? Now how much can you afford to pay if a collision accident occurs? Does $500 make sense to you? Or do you have enough in savings to cover a $1,000 deductible if need be? If you have enough savings, 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 you are paying more for your premium but that you will pay less if a claim should happen.

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 events not covered in all perils coverage for your home. Those events include earthquakes and floods.

All perils car insurance differs from collision insurance in that collision insurance covers collisions with other cars or objects. All perils car insurance covers damages from weather and things like fire and vandalism.

Comprehensive Claim vs Collision Claim

What if your car was vandalised? What if another car ran you off of the road and into a tree? In both these instances you will need to file auto insurance claims. Here’s how.

Here are the steps you need to take when making a comprehensive insurance claim and a collision insurance claim.

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

Step two is connecting with a claims representative. This representative 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 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.

In 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. Either repair shop will do.

In step five, the insurance company pays for repairs. They can pay the repair shop, direct 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.

In step six, when a claim has been resolved according to the terms of your auto insurance policy, the claim is considered closed. If you still have questions, don’t hesitate to reach out to your car insurance company. You want to make sure you understand every last part of your insurance claim and what happened and why.

Liability vs Comprehensive vs Collision

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 insurance helps to repair 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 insurance covers events such as fire, theft, vandalism and damages from weather. They are each very important insurance coverages. Here are some examples of how they work.

Let’s say you have all these insurance coverages, liability insurance, collision insurance and comprehensive insurance. Now let’s say you are at a stop sign and another car rear ends you. This collision would be covered by your collision insurance. You could make a claim for the damages caused to your car minus your deductible, which is $500. So if it was a $2,000 claim, minus your deductible of $500, you would get a $1,500 claim check to be used for repairs to your car. The other driver isn’t carrying liability insurance so it is up to you to pay for the car repairs on your own. Luckily for you, you carry collision insurance.

Here’s another scenario. You are running late and run into the back of a car stopped at a stop light. You were going fast enough to cause serious damage to the car and the driver and the passenger go to the hospital with injuries. You have liability insurance and this will help pay for the medical bills of the other driver and their passengers up to your liability limit, which is much more than the state minimum. Your liability insurance also would cover property damages which in this case would be the other person’s car. You also have collision insurance which pays for damages from a collision with another vehicle regardless of who is at fault in the accident. So your car will be repaired with help from your collision insurance, minus your deductible which is $1,000. You were not hurt in the accident and have no medical bills of your own to worry about. Having optional collision insurance helped you pay for repairs for your car.

Now, consider this scenario. Your almost, brand-new car gets stolen from a parking garage. In this case, your comprehensive insurance 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 vandalised. You are able to drive the car home and promptly make a claim for vandalism to your insurance company. Your comprehensive insurance covers 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 insurance 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 insurance 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 insurance is $80, according to the National Association of Insurance Commissioners (NAIC). And the national average for a six-month policy for collision insurance is $181.50, also by the NAIC.

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Collision insurance can make a big difference if you are in a serious accident. 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 insurance pays regardless of who is at fault in the accident. Collision insurance would pay for the accident claim, minus a deductible, which is $1,000. Without collision insurance, you would have to pay for repairs out of your own pocket. And that is why collision insurance can be so useful at the time of an accident.

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 insurance and theft is covered by your insurance. You will get a claim check for the current value of the car. Without comprehensive insurance, 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

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 Insurance Costs?

A recent survey by SmartFinancial found the average cost of comprehensive insurance to be $123 per year and the average cost of collision insurance 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.

Get a Free Auto Insurance Quote Online Now.

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