As you probably already know, if you lease a vehicle or if you used a lender when you purchased your car or truck, you have to have a lot more insurance on your vehicle than someone who owns his or her vehicle outright.
Most lenders will require that you have comprehensive coverage and collision coverage in addition to the coverage that is required by the state that you live in.
Many people, however, don’t realize that there is a difference between comprehensive insurance and collision insurance. This is an important distinction for you to understand because the time will come when you pay off your vehicle or you buy the vehicle that you are leasing and you won’t be required to have a high level of coverage any longer.
Some people mistakenly keep their comprehensive coverage and drop their collision coverage thinking that the comprehensive coverage provides insurance for every contingency. Understanding the difference is critical if you want to know when it is and isn’t OK to drop that collision coverage.
Read on to learn when you should keep collision coverage and when you should cancel collision coverage from your auto insurance policy and then be sure to enter your zip in to compare free quotes for car insurance!
The Difference between Comprehensive and Collision Insurance Coverage
Comprehensive insurance is important because of what it covers. First of all, it covers damage caused by nature. This could be hail, flood, fire and so on. In addition, comprehensive coverage provides you with coverage for theft and vandalism. Lastly, comprehensive coverage covers damages caused by animals. This does not include if you hit an animal while driving, but if an animal runs into your vehicle.
Collision insurance covers all collisions that occur with your vehicle. This means if you strike another car (or it crashes into you), an animal or an object such as a tree, fence, house, animal, etc.
As you can see, each of these types of coverage offers something valuable and different to your insurance coverage. The similarity is only that both can be a bit expensive. In order to keep your premiums down you will need to choose a deductible level that you are comfortable with. The deductible represents the amount of money you will pay out of pocket if you make a claim. Most insurance companies start the deductibles at $250 and go as high as $2,000. You should check with your insurance company to see what their deductible options are.
When it’s Okay to Drop Collision and Comprehensive Coverage from Your Vehicle
Now that you understand what the difference is between comprehensive and collision coverage, it is time to decide whether you need to continue paying for each of these types of coverage.
First of all, some insurance agents will recommend that you never drop either of these types of coverage. This is not because they are being greedy and they want your money, but because a majority of the time individuals without these types of coverage cannot afford the out of pocket expenses to repair their vehicle if an accident does occur.
This, however, is not practical for every type of vehicle or for every situation for that matter. Most people will drop their comprehensive insurance the moment they are no longer obligated to carry it. Why? Overall, the type of damage that can occur from acts of nature is rare and/or only occurs in specific areas. If you live in a high risk area, then you may want to continue your comprehensive coverage. If incidences are rare in your city or state, then you can save a lot of money by dropping your comprehensive coverage.
Collision coverage is a bit different, however. For one thing, most people don’t know that the insurance that they are required to carry by their state does not coverage damage to their own vehicles if they cause an accident. What does this mean? If you cause an accident and the damage to your vehicle equals $5,000, you will have to pay that entire amount out of pocket. The state liability minimums will cover whatever the damage is to the vehicle that you hit, not your own. With collision coverage, however, your vehicle is also covered if you are the cause of the accident.
So is there ever an instance where dropping your collision coverage is a good idea? Yes, there is. For example, if you are driving a vehicle that is worth $1,000 and your collision premiums are $1,500 a year, then it doesn’t make sense to pay for coverage that costs more than the value of your car or truck. Additionally, even if your collision coverage is super cheap but a mild fender bender would equal damage that costs more than the value of the vehicle that you are driving, then collision coverage just doesn’t make sense.
It is important to note that even the most careful of drivers may find themselves in a car accident and having the right coverage can make the difference between getting everything repaired or replaced right away or fighting lawsuits and financial disaster. Speaking with an insurance expert can make a huge difference in the choices that you make. Make sure, however, that you understand the value of your vehicle and what you can afford to pay for premiums before you make a decision. The great thing is that you can change your mind whenever you want and make changes to your policy or even change insurance companies if you are unhappy.
Choosing the Most Affordable Car Insurance
Now that you have at least a basic understanding of what collision and comprehensive coverage means for your vehicle, you need to decide what to buy. Like almost everyone else, you probably want to get the best prices for the type of insurance that you choose. The quickest way to do this is by using our free quote tool at the top of the page. Even if you currently have comprehensive and collision coverage from another company, using our free quote tool will ensure that you are paying the lowest rate possible.
Using our free quote tool allows you to compare the rates between several companies at one time. You can compare your states minimum coverage requirements, a medium coverage level or a full complement of every type of insurance that you could want from an auto insurance company.
Why not give our free, no obligation, quote tool a try today?