Comprehensive Vs. Collision Auto Insurance: Here’s What You Need To Know

Liability insurance is the cornerstone of auto insurance policies. It compensates you for the harm you cause to others. You should be able to pay for damage you cause as part of your social responsibility when driving, and liability insurance provides a system for that.

However, collision and comprehensive insurance are two other important components of a good auto insurance policy. They will pay for damage to your own vehicle or compensate you if it is stolen, which is something liability insurance will never do.

What Do Collision and Comprehensive Insurance Cover?

Collision coverage pays for damage to your vehicle if you collide with an object or another vehicle.

Non-crash damage, such as weather and fire, is covered by comprehensive insurance. It also covers car theft and damage caused by collisions with animals.

Auto insurers frequently sell collision and comprehensive car insurance as a package. Full coverage car insurance refers to a policy that includes liability, collision, and comprehensive coverage.

According to the Insurance Information Institute, 73 percent of drivers with auto insurance purchase collision coverage, while 77 percent purchase comprehensive coverage.

Examples of When You Could Make a Collision Claim

• Your car slides on ice and collides with a guardrail.
• To avoid a squirrel, you swerve and collide with a pole.
• When you walk out of a store, you notice that someone has dented your car and driven away.

Examples of When You Could Make a Comprehensive Claim

• You collided with a deer, and your fender is dented.
• Your car has been damaged by a fire in your garage.
• Your car has been damaged by a hail storm.
• Your car has been stolen and has yet to be recovered.

What’s a Deductible?

Deductibles are common with both collision and comprehensive insurance. The deductible amount will be deducted from any claim for collision or comprehensive coverage.

Deductibles of $250, $500, $1,000, and higher are common.

As a reward for good driving, some auto insurers offer "diminishing deductibles" to customers. If you don't make certain claims, your deductible will decrease over time under these programs.

The Maximum Insurance Payout

For both collision and comprehensive insurance, the maximum possible payout is the value of the vehicle right before the accident, minus the deductible amount, if it is totaled. A car is considered totaled if it cannot be repaired to make it safe to drive, or if repairs would cost more than the car's value, or if repairs would cost more than a certain percentage of the car's value. In many states, a car is declared totaled when the repair costs exceed 75% of the car's value.

And, if you have a new car, don't assume it will be more difficult to reach a totaling threshold. Because new car technology is so expensive to repair, cars are more likely to be totaled in an accident.

Do I Need Collision and Comprehensive Insurance?

If you have a car loan or a lease, the lender or leasing company will most likely require you to purchase collision and comprehensive insurance. This is to ensure that you do not default on your loan or lease if your vehicle is totaled or stolen.

After you have paid off your car loan, collision and comprehensive coverage will be optional.

Even if you are not required to purchase collision and comprehensive coverage, you may wish to do so. Consider this: if your car was damaged or stolen, would you be able to easily pay for repairs or a new car? If the answer is no, collision and comprehensive coverage provide some financial security.

However, as your vehicle ages, collision and comprehensive coverage may become less valuable in comparison to the cost. If your vehicle is totaled or stolen, the maximum possible insurance payout decreases as its value decreases, especially if you have a high deductible.

Assume you have a 2005 Honda Accord that is worth around $3,300. If you total your car in a flood and have a $1,000 deductible, your insurance check will be $2,300. You can decide whether the cost of collision and comprehensive insurance over a number of years is worth the potential benefit.

According to the most recent National Association of Insurance Commissioners data, the average collision claim is $4,334.16. The average total claim is $1,084.99.

How Much Are Collision and Comprehensive Insurance?

According to the most recent data from the National Association of Insurance Commissioners, the average cost of collision coverage is $363 per year and the average cost of comprehensive insurance is $160. See the average for your state in the table below.

What Collision and Comprehensive Insurance Won’t Cover

While collision and comprehensive coverage, as well as liability insurance, provide a broad range of protection, they do not cover:

• Injuries sustained in an accident. (Depending on the circumstances, injuries may be covered by the liability insurance of another driver, your own personal injury protection or medical payments insurance, or your own health insurance.)
• Items taken from your vehicle, such as a laptop or wallet. (Rather, consult your homeowners or renters insurance.)

What If Someone Else Damages My Car?

Collision insurance is useful if you inadvertently damage your own vehicle, such as by backing into a pole. However, it can also be useful if someone else collides with you. If this occurs, you have two options:

• Submit a claim to the other driver's liability insurance. If the accident was caused by someone else, their liability insurance should cover the cost of your car damage.
• Submit a claim with your own collision insurance. Perhaps you don't want to go through the insurer of another person. You can instead file a claim with your collision insurance. The disadvantage is that your insurance payment will be reduced by the amount of your deductible. However, insurance companies routinely seek reimbursement from one another for the damage caused by their policyholders, a practice known as subrogation. If your insurer subrogated and is reimbursed for your claim, it will reimburse you for your deductible.

What’s the Average Repair Time for a Damaged Car?

For cars that were driveable after an accident, the average repair time (from the time you drop it off at the auto body shop to the time you pick it up) is nearly nine days. According to a September 2020 report from CCC Information Services, a provider of data and technologies to the automotive, collision repair, and insurance industries, it's about 18 days for non-drivable cars.

Over the last five years, the average repair time has increased by one full day. CCC attributes this to increased vehicle complexity and vehicles that require additional repair steps such as calibration.

What About Insurance for Rental Cars?

If you rent a car, your personal auto insurance policy will usually cover it, including liability, collision, and comprehensive coverage. That is, unless you want to avoid potential claims on your own policy, you won't need to purchase the coverage offered at the rental counter, such as the collision damage waiver. Confirm with your car insurance agent that your policy will cover a rental car.

Rental reimbursement insurance will assist you in paying for that rental. This is a type of optional coverage that assists in covering the cost of a rental car if your vehicle is damaged in an accident covered by your insurance policy.

You will be responsible for any rental costs that exceed the rental reimbursement coverage limits. For example, if you have a daily limit of $30 for a maximum of 30 days, you will have to pay out-of-pocket for any amount that exceeds the daily limit or exceeds 30 days. You might be able to buy higher limits.

Auto Insurance Spotlight: Stolen Vehicles

According to the FBI's uniform crime report, a car was stolen every 42.2 seconds in 2018. However, according to the most recent data from the National Insurance Crime Bureau (NICB) Hot Spots report, car thefts decreased nationwide in 2019.

The Hot Sports report employs a theft rate calculated based on the number of stolen cars per 100,000 people. According to the report, auto thefts have decreased nationwide for the second year in a row. But not every state was so fortunate. In fact, 11 states experienced an increase in vehicle thefts over the previous year:

The comprehensive coverage of an auto insurance policy pays the value of your vehicle if it is stolen, but the best defense may be a few preventative measures. The NICB recommends the following four points of defense:

• Common sense. Always take your keys out of the ignition, close all doors and windows, and park in well-lit areas.
• Warning devices. Consider car alarms as well as visual devices such as column collars, steering wheel locks, and brake locks.
• Devices that immobilize. These keep thieves from circumventing your vehicle's ignition system (such as hot wiring). Smart keys, fuse cut-offs, kill switches, wireless ignition authentication, and starter, ignition, and fuel pump disablers are a few examples.
• Tracking devices. These systems typically employ GPS and wireless technology to notify you if your vehicle has been moved, as well as track and monitor the vehicle's location.