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Comprehensive and collision insurance are two forms of car insurance that often get mixed up. They both provide coverage for your cars, but are also quite different. Collision insurance provides coverage on your car if you are ever involved in an accident or collision. Comprehensive insurance covers other types of things that are not collision insurance. These include things like disasters, vandalism, theft, acts of God, and fire.
Comprehensive auto insurance does not cover damages to your car that are received in a collision. To have the best insurance protection on your vehicles, you need to have both comprehensive and collision insurance as part of your auto insurance policy. Both collision and comprehensive insurance will have deductibles that you will need to pay whenever you file claims to your insurance company. You can save a lot of money on both your collision and comprehensive insurance premiums by having higher deductible amounts. However, if you do need to file a claim, you will then have to pay more out of pocket, so make sure that your deductible amount is something you will be able to afford.
There is another form of insurance that you may want to investigate, particularly if you have a new car. Many times when you have to file a claim for a total loss on your comprehensive insurance, your reimbursement is based on fair market value of your car. This may actually be less than what it will cost to replace the vehicle, particularly if you still owe money on the car and are making payments. If you finance or lease your car, your lender or leasing agent may require you to purchase GAP insurance. This form of insurance will pay the difference between the actual replacement value (the amount you owe) for the car and the claim amount.
Collision insurance covers auto accidents or if you should happen to collide with a light standard or building. If you buy your car on credit, your lender or leasing company will require that you have collision insurance to cover you in case you are ever involved in an auto collision accident. If you did not have collision insurance and you ended up in a total loss accident, you might end up with a serious debt even though the car is totaled. Collision insurance pays to have your vehicle repaired even if you are the one at fault in the collision, and will also replace your car at cash value. If the collision was not your fault, the other party’s insurance pays. Their liability insurance covers the damages to your property and yourself, not your insurance. Therefore, if the collision is not your fault, it shouldn’t have any effect on your rates or premium. If you are found at fault in a collision, your rates will probably go up. If you make a claim on your comprehensive insurance you could also end up having higher rates.
