Comprehensive and collision insurance are two parts of an automobile insurance policy that are designed to cover the replacement value of the insured’s vehicle. When people refer to having “full coverage” on a vehicle, they often mean that the vehicle has comprehensive and collision insurance coverage. Unlike liability insurance, which is required by law in every state except New Hampshire, comprehensive and collision insurance are not mandated by the states. However, if the vehicle is financed or leased, the lender will typically require the insured to carry comprehensive and collision coverage as part of the contract. Typically, both coverages come with a deductible (some states mandate a zero deductible for glass coverage for retail customers) that in the event of a claim must be paid prior to your insurer settling your claim.
Collision and Comprehensive Insurance
Like the name implies, collision insurance is a coverage that is designed to pay to repair or replace your vehicle in the event of a collision with another vehicle or object, such as a lamp post.
Example) While driving, you hit a patch of black ice and collide with a tree. Your insurance company would pay to repair or replace your vehicle (minus your deductible) under the collision portion of your policy.
While collision coverage primarily applies when you are at-fault for the incident, there are circumstances when it would apply even if you are not at fault.
Example) You’re rear-ended by an uninsured driver and don’t have uninsured/underinsured motorist property damage coverage. In this scenario, you would make a claim against your collision coverage to cover the damage to your vehicle (Note: Your collision coverage would NOT pay our for any bodily injury sustained)
Example) Assume the same scenario as above, except instead of being uninsured, the driver who hit you has $25,000 worth of property damage coverage. However, the amount of damage to your vehicle comes to $35,000. In this scenario, you would first be paid by the other driver’s insurance carrier up to their property damage policy limit. You would then file a claim under your collision coverage for the remainder.
Unlike collision insurance, comprehensive insurance is designed to cover damage to your vehicle caused by anything other than a collision, such as fire, hail, vandalism, animal, break-in, etc. Like collision coverage, comprehensive coverage also has a deductible that must be satisfied before the insurer will pay out.
Example) While driving home, a deer runs out in front of your vehicle and you collide with it. The damages to your vehicle would be paid out (minus your deductible) by the comprehensive portion of your policy.
There doesn’t necessarily have to be damage for the comprehensive portion of your policy to kick in. Comprehensive coverage would also pay to replace your vehicle in the event that it is stolen.