Car insurance addresses two broad categories of risk: harm to yourself or to others, and damage to your vehicle or someone else’s car. Collision and comprehensive coverage fall into the second category of auto insurance coverage. They’re similar, but they don’t cover the same issues. In fact, comprehensive coverage is sometimes referred to as “other than collision” insurance or “physical damage” coverage.
What Is Collision Coverage?
Collision coverage is what saves the day if your car makes contact with another car – or almost anything else, for that matter – and damage occurs. It’s exactly what the name suggests. You’ve collided with something, or something has collided with you. It doesn’t matter if that something has wheels, like a rogue shopping cart, or if it’s planted in the ground, like a tree, a fence or a mailbox. Collision insurance even covers damage caused by potholes, icy conditions or if your car rolls over. The point is that you're driving at the time the event occurs.
The critical factor is that you have some measure of control when trouble finds you. Maybe you thought you put your car in park but you didn’t, so it rolls off after you get out of the vehicle and it hits something. This is a collision. You can make a claim under the provisions of your coverage, regardless of whether you were at fault.
Depending on the extent of the damage, this coverage might repair your car or replace it entirely. But it might only pay “actual cash value” to replace it – what it’s worth after depreciation has set in, not necessarily what it would cost you to purchase a new vehicle. It won’t pay for any injuries you sustain – that’s a whole separate area of coverage.
Read More: Market Value vs. Actual Cash Value
Comprehensive Coverage: What’s Covered and What’s Not?
The one thing you might strike with your car that isn’t covered by collision insurance is an animal. It might be someone's dog, a goat or a deer. The point is, it was mobile and had a mind of its own, at least before your vehicle made contact with it. You had no control over what it did. Comprehensive car insurance has your back if a band of beavers hacks into your car and destroys the upholstery.
The same goes for things that might fall onto your car and damage it, like a tree, and events like fire. Comprehensive coverage also covers theft, vandalism, damaging weather conditions and civil unrest, like a riot. Again, you had no control over these events and couldn’t reasonably have prevented them. This type of auto insurance basically covers you for any damage that’s not caused by a collision.
Comprehensive insurance won’t pay for medical expenses for you or your passengers, either. And like collision coverage, it generally pays actual cash value if your car is destroyed.
Neither comprehensive nor collision coverage is required by any state’s laws, unlike liability coverage. They are optional coverage, at least by law. The only one who could be hurt financially is you if your car is destroyed for some reason and you don’t have the coverage in place to compensate for that.
This isn’t to say, however, that your lender won’t require you to carry these coverages if you’re leasing the vehicle or you financed the purchase of your car. The company has a financial stake in the car, too, in these cases, so you might be obligated to carry these coverages to protect its investment.
Read More: Requirements to Finance a Car
Policy Provisions and Limitations
Both coverages are typically subject to a deductible if you make a claim. Maybe that deer that ran out in front of you caused $2,000 in damage to the front end of your vehicle. You have a $1,000 deductible on the comprehensive component of your policy. Your insurance company will pay $1,000 toward repairs – the $2,000 less the $1,000 deductible. You're responsible for paying that portion out of your own pocket.
You can choose the amount of your deductible, at least to some extent. Insurers typically offer them at $500, $1,000, $1,500 or $2,000. You have the option of determining how much you want to – or can – pay out of pocket.
Coverage limits also apply. Your coverage limit would typically be the actual cash value of your vehicle. It might sustain $5,000 in damage but it’s only worth $3,000 because you’ve been driving it for years and years. Your insurer would only pay $3,000 in this case.
Read More: Insurance Policy Limits
Do You Need One or Both Coverages?
You can elect to carry full coverage, both collision and comprehensive coverage, one or the other or neither, assuming that you own your car outright.
Choosing one coverage or another can depend on your driving patterns. You might want collision coverage if you drive a great deal, and you’re in control of your vehicle at most times. You might need comprehensive coverage if a good portion of those miles you drive take you through woods or up and down mountain terrain where a deer might leap out at you without warning. Comprehensive insurance might be warranted if you live or work in a high-crime area where your car is left unattended while you sleep at night or during the day because you're busy earning a living.
Many drivers choose to carry both because these coverages address such different issues. There’s a clear demarcating line between them. Ask yourself if you’d be smacking yourself if you bought collision coverage, then your garage roof fell in on your car. You’re covered for virtually any eventuality if you have both coverages on your policy.
When You Might Not Need These Coverages
Then again, you might not want to carry either type of coverage if your car is of negligible value, assuming that you have the income or sufficient savings to pay to have it repaired or to replace it if need be. Otherwise, you might want to carry these insurances to safeguard against finding yourself without a car and no financial means to repair or replace it. Insurance premiums are paid monthly, not in one prohibitive lump sum, so you can spread the cost out over time rather than put it out all at once to buy or repair a vehicle.
The Insurance Information Institute recommends figuring out how much one or both coverages would cost you in premiums over the course of a year, then multiplying that number by 10. Carrying these types of insurance might not make financial sense if your car is worth less than the resulting number. Farmers Insurance suggests that you might want to skip coverage if your vehicle is more than 10 years old.
How Much Will This Insurance Cost You?
You can usually save at least a little money by purchasing both collision and comprehensive coverages. Most insurance providers will “bundle” the policies under one umbrella. You’ll get a break on the premiums for each if you use the same insurer to provide comprehensive coverage and collision coverage as well.
Comprehensive coverage is usually less expensive than collision coverage if you own your car outright and want to choose between one or the other. The Insurance Information Institute indicates that this type of coverage can be had for less than $140 a year, although Progressive indicates that it could be twice that amount.
You can also choose higher deductibles. The more you’re willing to have come out of your own pocket to pay toward an insured event, the less your insurer will charge you for the coverage.
- Nationwide: The Difference Between Comprehensive and Collission
- Allstate: What Is Comprehensive Insurance?
- Insurance Information Institute: What Is Covered By Collision and Comprehensive Auto Insurance?
- Progressive: What Is Comprehensive Insurance?
- American Family Insurance: Comprehensive vs. Collision Insurance
- Farmers Insurance: What’s the Difference Between Comprehensive and Collision Coverage?
- Insurance Information Institute. "Auto Insurance Basics—Understanding Your Coverage." Accessed Sept. 22, 2020.
- Insurance Information Institute. "Automobile Financial Responsibility Laws By State." Accessed Sept. 22, 2020.
- Nationwide. "Do I Need Collision Insurance?" Accessed Sept. 22, 2020.
- Consumer Financial Protection Bureau. "What Is Force-Placed Insurance?" Accessed Sept. 22, 2020.
- Progressive. "What Is Collision Coverage?" Accessed Sept. 22, 2020.
- Insurance Infomation Institute. "What Is Covered by Collision and Comprehensive Auto Insurance?" Accessed Sept. 22, 2020.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.