To understand collision and comprehensive coverage we need to first break down the types of auto insurance in the United States.
Auto insurance has two general components; Liability Insurance, and Physical Damage Insurance. Liability insurance is referred to in most states as Bodily Injury Liability and refers to coverage for bodily injury or death in an event for which you are responsible. Liability insurance is compulsory in most states. Something about medical expenses and provide link???
Physical Damage Insurance covers damage covers the cost of damage to the actual car. There are two types of Physical Damage coverage – Collision and Comprehensive. Collision coverage covers any damage to your car, or another party’s car that is damaged as a result of a collision that is your fault. This usually included collision with trees, road signs and telegraph poles.
Comprehensive car insurance provides coverage for any loss or damage caused by incidents other than a collision. This could be in cases of fire, theft, vandalism or weather damage. Most insurance companies also recognise “Acts of God” in comprehensive car insurance, meaning events or incidences that are beyond human control. This includes any damage to a car caused by flood, tornado, hurricane and hail storm. Some people interpret the word ‘comprehensive’ to mean they are covered for all types of physical damage; however this is not the case. Comprehensive insurance does not cover collision unless both covers are purchased within the insurance policy. It is essential to know when it is important to purchase collision insurance as well as comprehensive car insurance.
Who should buy comprehensive and collision auto insurance?
Most insurance companies will not allow you to buy collision coverage without comprehensive coverage however both these physical damage covers are not compulsory in any states. The cost of both comprehensive and collision car insurance is going to be determined by your age, the driver’s experience and collision history, the cost of the car and the annual mileage. There is usually a deductable rangeing from $200 to $1000 depending on the type of insurance you have opted for. If your car is being financed or leased, the involved companies will usually require you to take out some type of physical damage coverage to ensure they can recover the costs of any damage to the vehicle. As collision insurance isn’t compulsory, it’s worth weighing up whether it is worth getting if you have an older car, however, if your car is worth more than $4 000, some type of physical damage cover such as comprehensive car insurance is highly recommended.