Comprehensive & Collision Coverage: How to Decide if You Need Them
Comprehensive and collision coverage both offer protection against repair or replacement costs for your vehicle in some instances.
While such coverage is not generally required by law, it can be required by a lender if you are leasing or financing your vehicle. Whether you need comprehensive and collision coverage or not will depend on various factors like where you live, the value of your car, and your finances.
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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.
Table of Contents
Comprehensive and collision coverage applies to specific types of damage that could happen to your vehicle.
Having comprehensive and collision coverage can provide vital extra protection, especially if you are leasing or financing your car or driving a high-value vehicle.
You can drop comprehensive and collision coverage if you have a low-value car, or you can afford to pay out-of-pocket in the event of a total loss.
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Do You Need Comprehensive & Collision Coverage?
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.
Car Insurance Coverage Types
Liability insurance protects you against financial loss for damages to another person’s property caused by a car crash.
There are two types of liability insurance:
- Bodily Injury covers medical expenses for the driver and passengers of the other car.
- Property Damage covers damage caused to another vehicle or property.
All states except New Hampshire require liability insurance by law.
Comprehensive insurance is a type of coverage that applies to damage to your vehicle caused by a non-collision incident.
Non-collision incidents can include:
- Natural disasters and weather-related incidents, such as floods, hail, hurricanes, tornadoes, volcanic eruptions and earthquakes
- Riots and vandalism
- Chipped and cracked glass (windshields, side glass, rear window glass or sunroofs)
- Fallen objects (branches, trees, ice, projectiles or rocks)
Comprehensive coverage is not required by law but can be required by a bank or company financing your vehicle.
Collision insurance covers damage to your vehicle caused by a crash involving another car or object, such as a tree, mailbox, guard rail, fence or telephone pole. Collision coverage is not required by law in any state.
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.
Questions to Ask Yourself Before Getting Comprehensive & Collision
Answering certain questions can help you decide if comprehensive and collision coverage is right for you. MoneyGeek listed some of them to help you get started.
Is your area prone to extreme weather conditions and natural disasters?
If your answer to this question is yes, consider getting comprehensive coverage. Comprehensive policies protect you in the case of damage to your vehicle caused by natural disasters, including tornadoes, hurricanes, hailstorms, earthquakes and other weather-related conditions. Comprehensive can also protect you if falling objects, including ice, trees and branches, damage your car.
Is your area flood-prone?
If you live in a flood-prone area, you may want comprehensive insurance, which can protect you from expenses if floods damage your vehicle.
Does your area have a high crime rate?
If you live in an area with a high theft rate, having comprehensive insurance is a great way to protect yourself against the expense of replacing your vehicle if it’s stolen. Comprehensive coverage can also pay for damage caused by riots, civil disturbances, explosions and vandalism.
Do you often drive through roads with high animal collision numbers?
Some areas are prone to animal collisions, such as deer-related car crashes. If that is the case for you, you may want to consider comprehensive insurance.
Do you often commute in heavy traffic?
Collision coverage may be right for you if you regularly commute in heavy traffic. High volume traffic can increase your risk of being involved in a car crash.
Do you frequently drive in areas with high car accident rates?
Collision coverage may be right for you if you frequently drive on roads with high crash rates. Look at collision rates in your area to determine whether this is a risk 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.
Factors to Consider When Deciding if You Should Get Full Coverage
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.
Key Factors to Consider Before Buying Comprehensive & Collision
- Vehicle ValueThe value of your car will play a significant role in determining whether you can opt out of comprehensive and collision coverage. Getting these coverage types is a good option if you have a high-value car. If you have a low-value or older vehicle, it may be better to drop them to save money on monthly premiums.
- Premium CostHow much are you paying for insurance premiums? If your premiums are more than 10% of your car’s cash value, it is best not to get comprehensive and collision insurance.
- Financial StateIf your finances allow you to pay out-of-pocket for a new vehicle, you can opt not to carry comprehensive and collision coverage.
- Risk FactorsIf you live in an area with high occurrences of natural disasters, crime or animal collisions, it may be a good idea to have comprehensive coverage. Consider getting collision insurance if you frequently drive in heavy traffic or crash-prone areas.
How Much Will Comprehensive& Collision Coverage Cover?
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.
ACV determines the amount your insurance company will pay to repair or replace your vehicle. Your vehicle’s depreciation is subtracted from the pre-accident value of your car to assess its ACV. You can check your car’s ACV using an online depreciation calculator, such as Nationwide’s and State Farm’s.
When Should You Drop Comprehensive & Collision Coverage?
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.
You can drop comprehensive and collision coverage, but you can’t drop liability insurance. Liability insurance covers the cost of damage to other people or their property if you are in a crash. In all states except for New Hampshire, this basic level of auto insurance is required by law.
Frequently Asked Questions
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.
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