Collision insurance is different from comprehensive insurance. Though they both are auto insurance, their major difference lies in the specific types of damage that they cover.
Collision insurance is a type of auto insurance coverage that helps cover the cost of the damage to your vehicle in the event of a collision, regardless of who is at fault. This coverage is designed to financially protect you if your vehicle is totaled or damaged in a collision with another car, object, or if it rolls over.
Your collision coverage will enable your insurance company pay for the cost of repairing or replacing your vehicle, up to the limits of your policy agreement, minus any deductible you choose. The deductible is the amount you agree to pay out of pocket before your insurance coverage kicks in.
Collision insurance is optional, you are not required by law to obtain it, but it can provide valuable protection for your vehicle, especially if it is new or highly valuable. If you are financing or leasing your vehicle, your lender or leasing company may require you to carry collision coverage as part of your insurance policy.
Comprehensive insurance on the other hand is a type of auto insurance coverage that provides protection against damages to your vehicle that are not caused by a collision, such as theft, vandalism, weather-related incidents, or other non-collision events. It is also an optional coverage that can be added to your standard auto insurance policy but is usually recommended in place of collision insurance.
Comprehensive insurance usually covers the cost of repairing or replacing your vehicle if it is damaged or destroyed by something other than a collision. It can also provide coverage for other expenses, such as rental car reimbursement and emergency roadside assistance.
In addition to auto insurance, comprehensive coverage could also be purchased for other types of insurance, such as homeowners insurance and health insurance. In each case, comprehensive coverage would typically provide protection against a wide range of risks that may not be covered by other types of insurance policies.
The cost of comprehensive insurance can vary depending on a number of factors, such as the value of your vehicle, your driving history, and the level of coverage you choose.
Differences between comprehensive and collision insurance
- Coverage: Collision insurance typically covers any damage to your car resulting from a collision with another vehicle or object regardless of who is at fault, while comprehensive insurance covers damage from non-collision events such as theft, vandalism, animal collision, natural disasters, and falling objects.
- Cost: Usually, comprehensive insurance is more expensive than collision insurance. This is because it covers a wider range of events and provides more extensive protection. However collision insurance could cost just as much, depending on your provider.
- Deductible: Both comprehensive and collision insurance policies have a deductible, which refers to the amount you pay out of pocket before the insurance coverage kicks in. The deductible for collision insurance is most often higher than the deductible for comprehensive insurance because the risk of a collision is higher than that of the events covered under comprehensive insurance.
- Requirements: Collision insurance is typically required if you lease or finance your car, while comprehensive insurance is not always required but may be recommended.
- Claims: If you make a claim on your collision insurance policy, your insurance company will typically pay to repair or replace your vehicle. If you make a claim on your comprehensive insurance policy, your insurance company will typically pay to repair or replace your vehicle, minus your deductible.
- Coverage limits: Both types of insurance have coverage limits, which are the maximum amount your insurer will pay for damages. Collision insurance typically has higher coverage limits than comprehensive insurance because the cost of repairing or replacing a vehicle that has been in an accident can be much higher than the cost of repairing or replacing a vehicle that has been stolen or vandalized.
In general, collision insurance is more expensive than comprehensive insurance because collisions are more common than other types of damage covered by comprehensive insurance. However, if you have a loan or lease on your car, your lender or lessor may require you to carry collision insurance.
The best candidate for collision insurance
The individuals better suited for a collision insurance policy is typically someone who:
- Individuals with valuable or expensive vehicles: if you own a very expensive, new or valuable car, collision insurance could be particularly useful for you, as the cost of repairing or replacing in the event of an accident can be ridiculously high. It is also highly recommended for drivers who have a history of accidents.
- Lives in a densely populated area: If you live in an area with heavy traffic, your risk of being in a collision may be higher, making collision insurance more valuable.
- Has a loan or lease on their vehicle: If you have a car loan or lease on your vehicle, your lender may require you to have collision insurance as part of your auto insurance policy, to protect their investment.
- Wants peace of mind: If the thought of having to pay for expensive vehicle repairs out of pocket causes you stress or anxiety, collision insurance can provide peace of mind.
When to drop collision insurance
Deciding when to cancel your collision insurance depends on your individual circumstances at the time, such as the value of your vehicle, your driving history, and your financial situation.
If your car is older and has reduced in value, you may want to consider dropping collision insurance as the potential payout you will be entitled to in the event of a collision may eventually be less than the cost of premiums you are paying on collision insurance.
If your driving history has improved greatly, probably due to your carefulness as a safe driver or driving in less populated areas/roads, you may no longer have a need for collision insurance
Your personal financial situation is also an important consideration. If you have enough money in savings to cover the cost of a new car in the event of an accident/collision, you may feel confident enough to drop your collision insurance.
Finally, your tolerance for risk is also a factor. If you are willing to accept the risk of having to pay for repairs or a new car out of pocket, you can choose to drop collision insurance coverage and forfeit the peace of mind having the insurance offers.