Understanding the difference between comprehensive car insurance coverage and collision insurance coverage is very important when it comes to researching and comparison shopping for better car insurance rates. A rate might seem great on the surface, and after you read the fine print, you find out it does not cover all of your needs! The coverage you get for that low rate might not be adequate, plus your deductible may be astronomical. If you are a good driver and be certain that you will never need to make a claim, then a high deductible will not make a difference. But, that is why they are called accidents – you do not intentally smash up your car. We all search for a way to save money. Cutting down on coverage for a lower insurance premium is one way many people save costs.
Comprehensive Car Insurance
Comprehensive insurance covers repair costs or the cost of replacement parts for damages to your vehicle, in some cases property contained within your vehicle and for accidents not caused by a collision – known as OTC (other than collision). This could include damage from natural disasters such as wind storms, fallen tree branches and hail, as well as damage caused by a third party like fire, theft and vandalism. Theft usually covers the car itself and anything deemed part of the car, something actually attached to the car, like the stereo. Personal items such as MP3 players and compact discs are not covered. However, you may be able to claim them through your homeowners or renters insurance.
Collision Car Insurance
Collision insurance is mandatory in most states, whereas comprehensive coverage is optional. When you have a car accident, most collision car insurance policies will cover your medical expenses and costs to repair or replace your vehicle, either you are at fault or not. Collision also covers damages in the case of a single car accident. If you hit a tree or take down the neighbors fence, for example, you will still be covered.
If you have a loan on your car, the lienholder (finance company) will most likely require comprehensive and collision insurance. This ensures that they will get their money in case something does happen to the car. Having both types of coverage increases your promotions. Many car owners will drop comprehensive coverage once they own their cars outright. If you own an expensive car it is a good idea to have comprehensive and collision insurance. Even a minor repair or replacement part for an expensive can be quite costly. If your car is older and repairs would cost more than the car is worth, then you really do not need comprehensive insurance.