Perhaps the two primary coverages in an automobile insurance policy are the collision coverage and comprehensive coverage. That’s because more auto-related incidents result in property damage than in any kind of significant bodily injury. Yet, collision and comprehensive insurance coverage are frequently confused and misunderstood.
In a nutshell, collision coverage provides insurance protection for physical damage occurring to a motor vehicle resulting from its impact with another vehicle or object.
To determine whether an occurrence resulting in physical damage to your vehicle may be covered by the collision, it helps to examine the dynamics of the occurrence. In general, the collision coverage will apply when the driver of the car was in control of the car.
Comprehensive Coverage
In contrast to collision coverage is comprehensive coverage. It is a horse of a different color. In fact, it will likely apply when, for example, a spooked deer jumps out onto the road and into your path.
It may also apply in these kinds of circumstances:
• Natural disasters: storms, tornadoes, hurricanes, earthquakes, hailstorms
• Fire, civil commotions, explosions
• Vandalism and theft
• Damage from impacts with animals, although a crash from swerving to avoid an animal may be considered a collision, especially if you hit another car, a tree, a phone pole, or similar while so doing
• Broken / shattered windows and windshield
• Falling objects
• Terrorism
Should You Buy Comprehensive Coverage?
You may think that the kinds of occurrences that comprehensive insurance covers are unlikely to happen to you so you don’t need it. I have no vested interested in whether you buy it or not, but think about it like this:
• Collision and comprehensive insurance are often sold as a unit, although they cover different risks and causes of loss.
• Even if you can reject comprehensive insurance coverage while buying collision, the marginal cost of keeping it may be minimal.
• Navigation systems and satellite radio systems are common. Those that are not permanently installed in the vehicle may get stolen. Subject to the terms and conditions of the auto insurance policy, the comprehensive coverage may provide protection.
• A vehicle kept on a busy street, rather than secured in a garage, is more likely to be damaged or stolen. In the former case, the premium for the comprehensive coverage will be higher than in the latter case. Therefore, you should consider the value of the car as a factor in determining whether or not to maintain comprehensive coverage (if you have a choice). Stated otherwise, since the purpose of comprehensive auto insurance coverage is to protect the value of the motor vehicle from non-collision related losses, the overall value of it is an important factor to consider.
• If the vehicle is financed, the lender may require that it be insured with both collision and comprehensive insurance. This to preserve the value of the collateral on the loan in the event of damage (by providing a source of money for repair). If there is no insurance as required, the lender usually has a right to obtain it to protect its own interests. The premium for that insurance is added to the loan, and the premium is usually much greater than you would have paid had you obtained collision and comprehensive insurance yourself.