Comprehensive Vs. Collision: In a Nutshell
If you recently financed a vehicle, your lienholder may have required you to have full coverage insurance.
While many people assume full coverage is an all encompassing auto insurance policy with all the coverages, that assumption is incorrect.
Full coverage insurance simply means you are adding comprehensive and collision coverage, the two kinds of coverages that cover Physical Damage to your own vehicle. You must also carry whatever your state requires.
Collision Coverage
This auto insurance coverage pays for the damage caused to your car when you “collide” or have an accident with another vehicle, an object, a pothole, etc.
You must set a deductible when you add this to your policy. This means you must pay out of your own pocket the amount you set on your policy, before the insurance company pays for the rest of the damage.
Comprehensive Coverage
Also known as “other than collision,” this type of coverage will compensate you when your vehicle sustains damage that wasn’t caused by a typical collision accident. This might include things like theft, windstorms, floods, hail and hitting animals.
You must also set a deductible for comprehensive coverage. The lower your deductible, the higher your auto insurance rates will be.
Why Do I need Comprehensive and Collision Coverage
Comprehensive and collision is not typically required by law, however, if you are financing a vehicle, your lienholder might require you to have it.
Also, if you have a newer or expensive vehicle, this offers protection and will cover repairs or the cost of replacing vehicle parts.
It’s also good to know that while their are some exceptions, many insurance companies will not allow you to add comprehensive without collision, and vice-versa.
