What is comprehensive & collision coverage on your auto insurance policy?
It seems everybody knows what the deductible is on their car insurance, but no one really knows what that means.
So today we’re going to talk about two coverages, collision coverage and comprehensive coverage.
The first thing to point out is these coverages are for your vehicle and your vehicle only. We’re not talking about other people’s vehicles, medical injuries, or anything else. We’re just talking about damage to your vehicle.
Collision Coverage
Let’s start with collision coverage, and again, I’m going to be talking in broad terms. So, things may vary based off of the exact scenario and your policy, but these are broad term definitions.
Collision coverage is what covers you for damage that happens to your vehicle while it is moving down the road.
Comprehensive Coverage
Comprehensive coverage is basically everything else that happens or could happen to your vehicle while it’s not moving, while it’s stationary.
An example– you run your vehicle into a tree, that would be collision coverage because your car was moving into that tree.
Comprehensive example- your car is parked, it’s stationary, and a tree falls onto your vehicle. That would be a comprehensive claim.
Some other collision examples– you run your vehicle into someone else’s vehicle, you run your vehicle into a building.
Comprehensive examples- your car is stationary and it’s stolen, it’s vandalized, again, a tree falls on it or some other object falls on it.
What Coverage Do You Need?
If you have a nicer newer car, you want both comprehensive and collision on your policy.
So how do the deductibles play into this? Let’s say something happens to your vehicle and you have damage of $5,000 to your car. If you have a $500 deductible, your insurance company will give you $5,000 minus your $500 deductible, so you would get $4,500 from the insurance company to help replace, or repair your vehicle.
Total Loss
Let’s talk about what happens if your vehicle is completely totaled, it’s a total loss, either it’s stolen or it’s damaged so badly that they aren’t going to repair it. What happens then? Most policies offer what’s called actual cash value. So whatever the value of your vehicle is at the time of loss or, in other words, at the time of the accident or at the time of whatever happened. That’s what you will get from the insurance company. So if your $30,000 vehicle is stolen and you have a $500 deductible, you’re going to get $30,000 minus $500. You’re going to get that check from the insurance company.
So, hopefully that helps clarify it a little more. What most people refer to as full coverage is this, adding comprehensive and collision to your policy.