Explain Comprehensive & Collision Automobile Insurance
By law, auto owners must carry insurance to cover the liability, repair expenses, and medical bills that can arise from a car accident. Liability insurance protects you from civil lawsuits that can arise when you are at fault for an accident, while comprehensive and collision deal with damage to the car. The difference between these two types of insurance is important to understand when considering the many options presented to you by car insurance companies.
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Collision Insurance
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If your car hits something -- either another car or an object -- the damage caused is covered by collision insurance. After any deductible is paid, the collision coverage pays for the balance of repair expenses, as well as towing and storage. If the damage amount is greater than the value of the car, the insurance company will decline to cover the repairs and instead pay the vehicle's fair market value.
Comprehensive Insurance
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If your car is damaged by an event other than a collision, then comprehensive auto insurance pays for the repair (over and above the deductible amount). If your car is stolen, for example, comprehensive coverage would provide you with a replacement vehicle of similar value. Comprehensive also covers windshield damage, collisions with animals straying into the roadway, or damage caused by a flooded road or a falling object.
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Legal Requirements
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Auto insurance laws vary by state, but most states require that if you purchase collision insurance, you must combine it with comprehensive insurance. Most states make comprehensive coverage alone optional. Lenders may require collision and comprehensive coverage as a condition of an auto loan. The lower the value of your car, the less motivation you would have to carry collision and comprehensive insurance, as the cost of insurance and the deductible amount may be higher than the car's value.
What About Liability?
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Liability insurance covers any damages to another person or vehicle for which you are at fault. If you are not at fault for an accident, the other driver's liability insurance would pay for your damage or injuries. If you are at fault, your own collision insurance covers your expenses.
Advantages
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Comprehensive and collision ensure that you can avoid the expense of repairs after an accident or event that does thousands of dollars of damage to your car.
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References
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