In a previous blog, I discussed purchasing as much auto insurance you can reasonably afford to protect you and your family in the event of a serious injury.
That message doesn’t necessarily apply to collision and comprehensive coverage under your auto policy.
These two coverages, which are optional, go hand-in-hand to protect your vehicle against damage, regardless of fault. Although there are similarities, the two forms of coverage are different.
So what are the differences between collision vs comprehensive coverage, and how much coverage should you have?
Collision coverage protects your vehicle against the risk of collision with another vehicle or object.
For example, this could include:
- A car crash with another car, a truck, or a motorcycle
- Colliding with an object like a tree, mailbox, or electric pole
- A collision with a pothole that damages your car
Comprehensive coverage protects your vehicle from other types of damage, such as flood damage, hail damage, glass damage, hitting a deer, theft, vandalism, and so on. Essentially, anything that happens to your car outside of a collision with another vehicle or object.
How Much Coverage Should I Have?
Such coverages are typically offered with deductibles ranging from $250, $500, to $1,000. The higher the deductible, the lower the premium.
If there is financing involved, lenders will normally require both of these coverages for the life of the loan.
When do you drop these coverages with an older vehicle that you own free and clear? There is no set rule. However, the most important factors are the book value of the car, which you can check on many websites, and comparing that value with how much you are paying for these coverages on that car each year. Keep in mind your insurance company may not value your car as high as you do.
For example, if you’re paying $500 per year to insure a car that may be worth no more than $2,500, then you’re paying 20% of the value of the car each year to insure it. At that point, it may be time to consider dropping these coverages.
Were You in a Car Accident?
If you were in an accident and are considering pursuing compensation, contact our office today to set up a free, no-strings-attached consultation.
We can review your case and decide what your next steps should be.