Car insurance can protect you from the cost of repairing or replacing a car that is damaged in a car accident. Few of us are fully prepared for the costs that come with fixing, or replacing a car, and your insurance policy can help you recover some of the costs without breaking the bank.
There are two types of coverage available that deal with the physical damage to your car: Comprehensive and collision. As you shop around for an insurance policy, it’s important to understand the difference between these two types of coverage, and what situations each is designed to address.
This type of auto insurance focuses on damage to your car that is not the result of a collision. This is the coverage you need if you want to ensure that you are protected when your vehicle is damaged as the result of:
Comprehensive damage can be used in combination with other types of auto insurance coverage, or it can stand alone. It is known for its affordability. Comprehensive coverage is often on the cheaper side, providing you with the ability to get more coverage for a smaller premium, and there is rarely a need to have a particularly high deductible.
As the name implies, collision coverage is designed to protect you in the event that you hit something with your car. This can be another vehicle (moving or standing still), or it can be an inanimate object.
Collision coverage will cover you if you make a mistake, hitting a guardrail, or if slippery conditions send you careening into a tree. It is also worth noting that if your car sustains damage due to a pothole, it is considered something to be taken care of by collision coverage.
In general, collision coverage can be a little more expensive. Additionally, you might only be able to buy collision coverage if you also buy liability and comprehensive coverage. Many consumers choose to select a higher deductible on collision coverage in order to reduce the cost of the premium. If you choose a higher deductible, you should make sure that you have the ability to pay the deductible. An emergency fund can help you meet this obligation.
The advantage of collision coverage is that you are covered if you make a mistake (something that is bound to happen sometime) with your car. Comprehensive damage, in many cases, is about covering damage to your car from events outside of your control.
In reality, you should probably get both comprehensive and collision coverage. This is because they take care of two different things.
Some consumers choose to drop some of their coverage, usually comprehensive coverage, as the car gets older. If you car is getting older, you might decide that the cost of paying for the insurance is more than the car is worth. If this becomes the case, dropping some of your coverage might make sense.
If you need your car, especially if you need it to get to work and earn a living, the right auto coverage is important, since it can help you repair your car, or provide you with the money to buy a different car, without causing a financial catastrophe.
Photo by adrian8_8 via Flickr.
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