Comprehensive & Collision Coverage: How to Decide if You Need Them

Insurance cost varies and can depend on several factors. It’s a good idea to assess your needs to determine whether you need comprehensive and collision or if it is safe to drop one or both to save money on your monthly premiums.

Both coverage types are optional. Comprehensive and collision coverage can be vital if you live in a risky area or have a high-value car. You may also be required to carry them if you are leasing or financing your vehicle.

When deciding if comprehensive and collision coverage is right for you, there are various factors to consider. These include your location, your vehicle’s value, the theft rate in your area, your financial situation and whether you are leasing or financing your car.

• Do You Need Comprehensive & Collision Coverage?
• Factors to Consider
• Coverage Limits & Deductibles
• When Should You Drop Comprehensive & Collision Coverage?
• FAQs

Auto insurance protects you against loss in the event of an accident or a covered incident. The types of coverage you choose to include in your car insurance policy depend on your circumstances. Comprehensive and collision coverage are often included in full coverage auto insurance policies.

Comprehensive insurance protects you in the case of damage to your car caused by incidents such as fire, vandalism, falling objects, weather-related damage and theft. Collision insurance covers damage to your vehicle caused by a crash involving another car or object.

If you are leasing or financing your car, you will probably need comprehensive and collision insurance. Banks and other financing companies usually require you to keep these types of coverage while you carry a loan or lease for a vehicle.

Getting comprehensive and collision coverage is a good idea if you own a high-value vehicle. You should also consider your location, including theft rates, vandalism and animal collision in your area.

You should also take a look at your finances. If you can’t afford to cover the cost to repair your vehicle or pay for its total replacement out-of-pocket, comprehensive and collision insurance will protect you against these losses.

There are also instances when having liability coverage is enough. It may be your best option if your car has a low value or is an older model car. You can also choose not to carry comprehensive and collision insurance if you can pay out-of-pocket for your vehicle's repair or total replacement.

Various insurance products are available to drivers. While all of them offer some financial protection, they differ in terms of what damage and situations are covered.

Many people are better off with full coverage car insurance. Full coverage includes comprehensive and collision provisions. Some drivers can get away with only liability coverage. You will want liability-only coverage if basic protection is enough for you. Liability insurance covers bodily injuries and property damage to another party in the event of a crash.

If you are worried about possible expenses associated with damages your car may suffer in an accident, you may want full coverage insurance with comprehensive and collision included. Knowing how to assess your needs and circumstances can help you determine what type of coverage is right for you.

Carrying comprehensive and collision coverage is not required by law, and many drivers may think of them as unnecessary expenses. But that is not the case for everyone, especially those who can’t pay the full cost to repair or replace a vehicle out of pocket.

Having these types of coverage can mean higher auto insurance premiums, but there are cases when paying extra for one or both is your best option.

There are several points to consider when deciding whether comprehensive and collision insurance is right for you. The most important factors are your vehicle’s value and insurance costs.

Risk factors, such as those related to your location, also play a role. Your financial circumstances and needs will also affect your decision.

If you can pay out-of-pocket to repair or replace your vehicle, you may not need comprehensive and collision coverage. You can also remove these coverages from your policy if your car is low value.

With the best full coverage car insurance policy, you will get a lot of value in exchange for your premium. Liability-only car insurance covers only the other driver in an at-fault accident, but full coverage policies cover damage to your own vehicle, including damage from a natural disaster.

But if you’re paying more for insurance than your car’s worth, you might be paying too much for coverage.

Comprehensive and collision insurance offer additional protection if you are involved in a crash, or your vehicle is damaged in another way. Typically, these insurance types will cover your car's actual cash value (ACV) minus your chosen deductible amount.

ACV refers to your insured car's value, factoring in depreciation. Your deductible is the amount you will pay out-of-pocket when making a claim.

Deductibles typically range from $100 to $1,000. Your deductible amount affects the cost of your insurance premiums. If you have a higher deductible, you will have a lower premium. The right deductible amount depends on your resources. If you can afford a $1,000 deductible, you can reduce the cost of your car insurance.

It is often a good idea to keep full coverage for your vehicle. However, there are instances when you will reasonably want to drop either comprehensive or collision coverage.

For example, if you have a low-value or older model car, paying extra for these coverage types may not be worth it. You may also opt to remove one or both if you have enough cash to cover potential expenses or replacement costs.

Assessing your needs is the best way to decide when to drop comprehensive and collision auto insurance. If your car is old or has low value, paying extra for insurance premiums is likely not worth it. If you can pay to replace your vehicle in the event of a total loss, you may not need comprehensive and collision insurance.

Your driving record and history can also affect your decision. If you are a cautious driver or don’t drive often and your car usually stays in your garage, you may not need collision insurance.

Both comprehensive and collision are optional coverages. MoneyGeek answers some frequently asked questions to help you determine whether these types of coverage are right for you.