Comparing Comprehensive and Collision Insurance
What is the difference between comprehensive and collision insurance? They’re basically the same thing, but one has slightly higher premiums than the other. Comprehensive coverage pays for damages to your vehicle that occur even in the event of no accident at all. Collision only covers damage to your vehicle that happens as the result of an accident.
Comprehensive coverage applies to both collision and comprehensive policies. If your vehicle’s value at the date of the accident exceeds the limit on your policy, you will be paying more than you’d pay if the accident was the result of just a collision. So, the question is what if your vehicle isn’t damaged in an accident? Does comprehensive cover it?
Comprehensive, unlike collision, actually pays for the repair or replacement of your vehicle. You won’t be out money just because another vehicle was damaged in an accident. Comprehensive also covers the repair or replacement of your own vehicle, as long as the limit on the policy holds. In addition, comprehensive covers any medical expenses that occur as a result of an accident. So, if you are the one who caused the accident, your insurance company will cover your medical expenses up to the actual cash value of your vehicle.
There are times when comprehensive and collision insurance might overlap. If you have a loan on your vehicle, and that the loan is for substantially more money than your actual cash value, your bank may require you to purchase collision insurance. The bank can recoup its loss by taking over the loan and then requiring you to purchase collision insurance to cover the rest of your loan. This is legal, but you must know that the bank is legally able to do this – it’s just that you, the insured, don’t have to worry about this if you have adequate collision coverage.
Collision only pays for the other vehicle damage. So, if you hit a fence, or another vehicle, comprehensive insurance will not pay for the repairs to your car. Simply put, if you damage your own car, comprehensive coverage will not pay for the damages to another vehicle. In some cases, a combination of collision and comprehensive coverage will replace the vehicle. Sometimes, the vehicle is repaired, and then the driver takes a new policy.
However, many car owners do not always make sense on this issue. They often think that it’s okay to have collision coverage, even though they already have comprehensive coverage, since they believe that they already have coverage that covers other areas, such as theft. The problem with this approach is that it’s often financially wise to replace the car in a collision. This is often not the case, however, and if you’re on an older car, it makes sense to replace the whole car – even if it’s inexpensive to do so. It’s better to pay the extra money up front to save the expense in the long run.
Here’s why comprehensive insurance is more expensive than collision. Comprehensive covers a vehicle in the event of an accident, regardless of who was at fault in the incident. Therefore, if you have a driver that has no insurance or very limited insurance, your insurer will not pay to repair or replace your vehicle. If the only damage incurred is your own fault, then your insurer may settle the claim with your agent for a percentage of the premium you have to pay. Because comprehensive insurance offers little financial reward in the event of an accident, many people purchase it without even considering the advantages. However, what many people don’t know is that the premiums can be lowered by raising the level of deductible.
Another thing to keep in mind when comparing collision and comprehensive coverage is the fact that many states require some form of comparative value. This means that you are required to compare the cost of having your vehicle repaired versus the cost of having it totally replaced. While it may seem unfair to compare the repair costs of two vehicles with similar damage coverages, it is important to note that the formula used to determine replacement cost is subjective and may vary from state to state. Therefore, it is recommended that you contact your local auto insurance agent and get their opinion on which would be best in your situation.