Collision and Comprehensive: What’s The Difference?
A part of your personal or commercial auto policy about which you might see references are collision and comprehensive coverage. You know that they’re available, and you know that they have deductibles, but maybe you don’t know what they are.
Or, maybe you don’t know that they are available. After all, these are optional coverages on virtually every car insurance policy, technically speaking.
Collision and comprehensive coverage are components of “physical damage” insurance within an auto policy. To understand what it is, it also helps to know what it’s not.
Collision and Comprehensive Is Not Liability
By definition, liability coverage is bodily injury or property damage inflicted upon a third party. You, the insured, are the first party. The insurance company is the second party. The person or property suffering injury is the third party. For example, someone slipping and falling on your convenience store’s freshly waxed floor is a liability claim. You do not get paid for this claim; the person who slipped does. Liability insurance covers them for something that may happen because of you.
This definition does not apply to physical damage coverage, which is for damage to an insured’s own vehicle. It is “first party” coverage because it covers you, or specifically, your vehicle for damage.
Crashing your car into another one is collision for both of you. In that respect, it’s exactly what it sounds like. The vast majority of claims an insurance agent hears about are collision matters.
An insured may elect not to carry this coverage if a vehicle is too old. For example, if your car is 12 years old and worth $2,000, minus the deductible, you’re not getting back much, anyway, but you’re paying premium for it.
If you are in a no-fault state, the insurance carrier will pay out on the claim regardless of whether or not you’re responsible for the accident. In the event your policy contains a “waiver of deductible,” if you are not at fault, the insurance company will not withhold the deductible from your claim payment.
Comprehensive coverage is also known as “other than collision” coverage. Whereas collision comes into play when the vehicle crashes with another, comprehensive is for damages not caused in a collision. For example, if your vehicle is damaged in an attempted theft or by hail, hopefully, you have comprehensive coverage.
What most people may know as a practical use of comprehensive coverage is for glass breakage. In some states, like Massachusetts, if you have comprehensive coverage, no deductible applies per state law. Some may call this “full glass coverage.” In other states, like New Hampshire, there is no law in place mandating full glass coverage, meaning you may have to pay a deductible on a windshield replacement. If your comprehensive deductible is too high, you’re out of luck. Most glass claims are under $1,000.
While someone might decline collision coverage on an older vehicle, having comprehensive always makes sense for other types of damage. This is especially the case if you live in a full glass coverage state.
Why Have Collision and Comprehensive Coverage?
As mentioned earlier, this is typically an “optional coverage.” In layman’s terms, there is no statutory requirement to have it. However, what if you have a car loan? For that brand new Infiniti you have in the driveway, if you financed it, you need to have collision and comprehensive.
Why? Because the bank needs certainty that its collateral is insured. If you don’t have coverage for damage to the vehicle they technically own, that’s a big problem for them, and therefore you.
For more insight on how to pick the right collision and comprehensive deductible, we have a few tips here.