Auto insurance policies have comprehensive and collision coverage to protect your investment in your vehicle should it be damaged or stolen. Both of these coverages are required if you have an auto loan. However, even if you own your car free and clear, it is a good idea to keep these coverages on your car as even a "fender bender" can result in a huge car repair bill.
What do comprehensive and collision cover?
The collision portion of your auto insurance policy covers damage to your vehicle should you cause an accident. This can include hitting a post, something lying in the road, another car, and so on. Your vehicle is restored to the condition it was in before the accident minus the deductible.
Comprehensive covers damage to your car other than what happens in a car accident. Examples include a large tree branch falling on your car, vandalism, fire, and theft. This coverage, too, will cover the damage minus the deductible.
Comprehensive coverage includes:
Whether it's a collision or a comprehensive claim, there will always be a deductible. Insurance companies offer deductibles ranging usually from $250 to $1,000. The higher the deductible you choose the less costly the policy will be. You can have both comprehensive and collision coverage but choose a different deductible amount for each.
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Do you need comprehensive and collision?
If you have a loan, the lender requires both of these coverages on your car, usually with maximum deductibles of $1,000. If you lease your car, the maximum deductible they allow will likely be $500. The lender wants to know that if damage occurs to the car it will be repaired. Which makes sense because until you've paid the money back they own the car.
If you've paid off your car, it can still make sense to keep both of these coverages on your car as repairs can be very expensive. What seems like minor fender bender damage, for instance, can end up costing thousands to fix.
If your car is around 10 years or older, then it could make sense to remove these coverages. An auto insurance company is only going to cover costs up to the value of the vehicle. In other words, they won't cover damage that exceeds what your car is worth and will total it instead. It gets to the point where the cost of comprehensive and collision coverage exceeds their usefulness.
When it comes to comprehensive vs collision coverage, comprehensive is the less expensive of the two. For this reason, it can make sense to keep comprehensive coverage on your car longer than you do collision. Comprehensive coverage is especially a good idea in areas with a lot of car break-ins and theft, even if the car is older.
>>READ MORE: How much coverage do you need?
More coverage for confidence
Having both comprehensive and collision coverage gives you peace of mind that if you’re involved in an accident, you're not going to bear the full financial brunt of fixing your car.
Your auto insurance company has a list of shops in your area they've already approved, which speeds up the claims process and makes it go smoother. You can pick your auto body shop as well, just know it will take a bit longer to get things approved.