Understanding comprehensive car insurance and collision coverages is an important topic to research when shopping for or considering ways to save on car insurance. Everyone searches for ways to save money, and in some cases comprehensive insurance is one of the ways people cut costs. The information below outlines what is generally covered under collision and comprehensive insurance.
Comprehensive Car Insurance
Comprehensive insurance covers the cost of repair or replacement for damages to the insured's vehicle and/or property in the vehicle for non-collision type accidents, sometimes referred to OTC (other than collision). For example, this could be damage from natural disasters like hail or wind storms, fire damage, theft or vandalism. In the case of theft, if there are personal items in the vehicle that are not related the car, comprehensive auto insurance may not apply. For example, comprehensive insurance will cover the theft of a car stereo, but not compact discs or mp3 players, which are classified as personal property that normally would be covered under homeowners or renters insurance.
Collision Car Insurance
In the event of an auto crash, collision car insurance covers the insured's medical expenses and the repair or replacement of the vehicle, whether or not the insured is at fault. Collision also covers property damage in the case of a single car accident, for example if you hit a tree or someone else's property. In some cases comprehensive insurance is optional, whereas virtually all US states require collision insurance.
If you finance your car, the lienholder (finance company) usually requires both comprehensive and collision insurance. Both types of coverages increase your premiums. Some owners, once they own their cars outright, drop this type of coverage. However, if you have an expensive car, it's wise to have both comprehensive and collision. If you have an older car that potentially would cost more to replace or repair than the car is worth, insurance experts may advise you not carry comprehensive insurance.