If you’re a homeowner then you may be tempted to opt for Comprehensive Vs Collision Insurance, as this may seem the cheaper option. However it is important to realize that there are some significant differences between these two forms of car insurance. This is why you should always get quotes from your current insurer before moving forward. Here we’ll look at what each of these policies have to offer you…
Comprehensive insurance covers damage to your own car that isn’t due to vandalism or accident. Essentially this means that everything on the car is covered by the policy, whether it’s the windscreen being smashed to bits in an accident or the tyres being slashed. Comprehensive covers car theft and damage due to vandalism and flooding. However it doesn’t cover damage caused by a natural disaster. A comprehensive insurance policy will not cover damages caused by fires or electrical faults. This is why you need to have third party or fire and theft cover taken out.
A comprehensive or collision insurance policy will only cover the other car. What this means is that if your vehicle is damaged whilst driving another car, then you won’t be covered. It may seem like a straight forward thing to do, after all you’re only covering the car you’re driving, right? Not exactly, if the other car is damaged whilst insured then the first vehicle will be forced to pay out, even if it’s not your fault. This is known as under-collision insurance.
Collision Insurance only covers damage to a vehicle that you are driving. This means that if you hit another car and the other car is covered, then your auto insurance coverage will not pay out. Collision coverage kicks in if you hit a car and it is your fault. It doesn’t matter who was at fault, your auto insurance only pays out if the accident was your fault.
If you have comprehensive insurance, then you are protected against collision damage, regardless of who was at fault. This means that if you hit a pedestrian, the cost of their medical bills would be covered. Although this could make many people angry, it could also save you thousands of dollars in the future. Your comprehensive cover protects you for the worst case scenario; there are just bad things that can happen. To learn about the difference between comprehensive vs collision insurance, check out Joywallet’s article.
When you’re deciding whether or not you need collision coverage, it’s always a good rule to follow. If you’ve only recently purchased your vehicle, and it’s brand new, then collision should be your choice. However, if you’ve had your vehicle for a while and it has been in an accident before, then comprehensive could well be the better option. The reason is simple; your current policy covers collision damage, so if you have it, you won’t need to look for new collision insurance. Comprehensive, on the other hand, covers damage that happens regardless of who was at fault.
So when you’re shopping for car insurance, be sure to check both ways. You should understand both collision and comprehensive, and base your decision on your needs. If you don’t currently have collision coverage, and you have a brand new car loan, collision is definitely going to make more financial sense than comprehensive. For instance, say you hit a pedestrian when crossing a street. If you don’t have collision coverage, the cost of getting the medical bills paid could make your loan balloon and you’ll be paying thousands of dollars towards a loan.
Another example could make collision insurance the better choice. Say, you’ve put your car through a minor collision. The damage was minimal, so you were able to get your car fixed and keep it running. However, you live in an area that has been hit by a natural disaster and all of your trees have been damaged. Comprehensive will cover your repair bills, but you could end up with thousands of dollars in additional bills, because you are now responsible for replacing everything around your house.