Comprehensive vs. Collision Insurance
When it comes to protecting your car, comprehensive and collision coverage are two important options to consider. While both cover damage to your vehicle, they apply in very different situations. Understanding when each type of coverage kicks in can help you build a car insurance policy that matches your needs and your budget.
Collision coverage applies when your car is damaged in an impact with another vehicle or object like a fence, pole or mailbox.
Let’s say you choose a $500 deductible for collision coverage, and you hit a light post in a parking lot. The total damage comes out to $2,000. You would pay your $500 deductible toward the damage to your vehicle, and your insurance carrier would pay the remaining $1,500.
Comprehensive coverage, also known as “other than collision,” pertains to physical damage to your auto caused by things other than a car crash. Examples include fire, theft, vandalism, flood and more. In some states, an animal, such as a deer, hitting your car is also covered under the comprehensive portion of your policy.
Comprehensive insurance applies to cost to repair or replace your vehicle and carries its own deductible. For example, your car has $3,000 in damage from a hailstorm. You have a $1,000 deductible which you would be responsible for, and your insurance company would cover the remaining $2,000.
Understanding the differences between comprehensive and collision insurance
Comprehensive and collision coverage are two of several important auto insurance coverages. Here’s a breakdown to help you decide if they're right for you.
| Comprehensive | Collision | |
|---|---|---|
| What it protects against | Damage from events other than a crash: theft, fire, falling objects, vandalism, natural disasters | Damage from a crash with another vehicle or a stationary object |
| When it applies | A tree branch falls on your parked car You hit a deer Your car is stolen Hailstorm causes damage | Your vehicle is rear-ended You back into another vehicle You hit a guardrail Your car rolls over |
| Cost | Typically costs less due to lower claim frequency and severity | May cost more due to claim frequency and costly repairs |
Do I need comprehensive and collision insurance?
There’s no one-size-fits-all answer to this question. Unlike liability insurance, comprehensive and collision coverages aren’t required by law, so the choice to have them may be up to you. Consider these key factors before you make your decision:
Vehicle ownership
If your car is leased or financed, your lender will likely require both collision and other than collision coverage. That’s because they want to protect their investment in case something happens to your car.
If you own your car outright, especially if it's older or lower in value, carrying both collision and comprehensive coverage may not be cost-effective. For lower-value cars, the cost of both coverages could exceed the potential payout in the event of a claim. In such cases, you might consider opting for just one type of coverage to ensure you're still protected in certain situations.
Financial risk
One of the main purposes of insurance is to help reduce financial uncertainty and make accidental loss manageable. If you’re not prepared to cover the cost of repairing or replacing your vehicle, then you may want to opt for both comprehensive and collision coverage. But if you’re financially prepared to handle the loss yourself, then you may decide to decline one or both coverages.
Environmental and driving habits
You should consider where and how you drive if you’re considering waiving either collision or comprehensive coverage. For example:
- If you live in a city or commute through heavy traffic, collision coverage might be a smart move.
- If you live in an area with frequent hailstorms, wildfires or wildlife encounters, then comprehensive coverage may be beneficial.
- If you park on the street at work or at home, the increased risk of theft or vandalism may be a good reason to consider other than collision coverage.
How to choose the right protection
While comprehensive and collision coverage can be a fundamental part of your auto insurance policy, it’s just one piece of the puzzle. To make sure you’re fully protected, consider other coverage options that can help protect both you and your finances.
Liability Coverage: Protects against claims if you’re responsible for an accident.
Personal Injury Protection: Covers medical expenses and loss wages, regardless of fault in an auto accident.
Medical Payments Coverage: Pays for your medical expenses or those of your passengers following a covered auto accident.
Uninsured/Underinsured Motorist Coverage: Provides protection if you’re involved in an accident with a driver who doesn’t have sufficient or any insurance.
Your Policy, Policy Declarations or Amended Declarations in effect on the date of loss is the primary source of reference for your coverage, coverage limits and deductible amounts.
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