Comprehensive Vs. Collision Car Insurance: The Differences And When You Can Cancel

If you complete quotes online, most insurers "recommend" or even default in a collision and comprehensive coverage.

Many drivers roll with it statistically (pun intended). 74% and 78% of drivers cover collisions and comprehensive coverage, costing them $900 more a year, respectively.

What if I tell you that you do not even need a collision or comprehensive coverage, despite their important sound names? And, obviously, the cancellation would save you thousands in the next couple of years.

Let's examine the collision and comprehensive auto insurance: what they protect, what they don't cover and when cancellation is legal.

Comprehensive vs. collision insurance coverage 

What is comprehensive coverage?

I'll start by saying comprehensive insurance isn't comprehensive.

I would have called them "accident" and "Incident" insurance if I had been working at Travelers insurance in 1898 when there was a collision and comprehensive coverage. It will be much less complicated at least with certain labels.

So what's 'comprehensive,' aka insurance incident?

Comprehensive insurance provides coverage for damage to the vehicle beyond the crash, such as:

• Natural acts – damage to the floods, hail damage, falling trees, lightning, etc.
• Crime – theft, vandalism, getting keyed, etc.
• Miscellaneous damage – fire, explosions, getting hit by a deer, getting smashed during a riot, etc.

Here is a way of putting it: if your collision covers damage, the damage you find is comprehensive. If you were struck by another driver and your automobile suffered damage, you probably have a comprehensive insurance policy.

My colleague Clark and I both filed comprehensive college charges. In both cases, a string of four letters was murmured and we went up to our cars.

In his scenario, somebody from the above dorm throwed a water ball into the car park below. It would have supposed that someone's car would split harmlessly – nope! It blasted through the windshield of Clark and sent water down its central console, freezing its CPU and completing the vehicle.

My story is much shorter; somebody kept my car in my dormitory car park. I've got no suspects to this day. I can't call a person I really believe would do such an odd, low-life act (still bitter).

All of this is said to include some situations in which the vehicle can be driven, damaged, and protected by comprehensive insurance, not collision insurance. If the vehicle is damaged or vandalized in movement, this is all comprehensive because it was not part of a car crash in technical terms.

What is collision coverage?

The collision coverage helps to cover the cost of the vehicle repairs after a car crash.

Collision fills a significant void left over from the property damage liability (PDL) coverage. 48 states require drivers to have PDL to compensate for the harm caused by default drivers. The highways are packed with uninsured drivers without minimum insurance legislation and the chances you would be struck by someone who will never pay you back are too great.

That’s why states require PDL, but they don’t require collision because:

1.It's very costly.

2.The government doesn't really care about your own car's damage.

That said, the line between the end of PDL and the start of a collision can be a little confusing.

Scenario 1: you hit another driver

• What property damage liability covers: damage to their car.
• What collision covers: damage to your car, and your premiums will likely increase.

Scenario 2: you’re hit by an uninsured motorist

• What property damage liability covers: nothing.
• What collision covers: damage to your car, and your premiums won’t increase.

Scenario 3: you’re hit by an insured motorist

• What property damage liability covers: nothing.
• What collision covers: nothing (the other driver’s property damage liability will pay you).

Scenario 4: you’re hit by an insured motorist, but their insurance won’t payout

• What property damage liability covers: nothing.
• What collision covers: (potentially) the difference between the payout and the actual cost of repairs.

Scenario 5: you hit a stationary object (parked car, fence, etc.) 

• What property damage liability covers: cost of replacing or repairing the other person’s property.
• What collision covers: damage to your car, and your premiums will likely increase.

My favorite example of a collision insurance claim is the one my buddy Jake filed for his Cadillac. During the night he sailed through some fast windy rural roads and unexpectedly reached a two foot rock just outside of the white line. He collected a police report and submitted a collision complaint, which he supplied as the rock bent his frame. To his horror, he was also quoted "for destruction of the property of the church." He contested the accident at the appeal, ordered the Church to remove the holy rock, and did not increase his premium by his supplier.

So this is collision insurance. In short, it includes damages to the vehicle after a collision where the property damage liability is not reimbursed. Collision insurance, in its most basic form, effectively covers you against your own car's injury.

Comprehensive vs. collision vs. property damage liability insurance

The three most popular (and most expensive) forms of car insurance are Collision, comprehensive and PDL, and the line between them may sometimes seem confusing.

Here’s a generalized recap:

1.In the case of an accident, Collision will cover damage to your vehicle.

2.Comprehensive covers damage to your car outside the context of an auto accident.

3.Property damage liability covers damage to other people’s cars and property.

To illustrate, here’s a table of some claim scenarios and what types of coverage apply:  

I hope that everything clarifies which collision and comprehensive insurance cover. Now, let's just discuss how much you really need from each of them.

You probably already pay for a collision and comprehensive coverage, statistically speaking (three out of four drivers do). I know that it's tentative right now to drop them and save $900, but it may make financial sense for you to retain them.

When does it make sense to keep comprehensive and collision coverage?

I'll save you some reading while your vehicle is financed or leased: probably  you can't drop a collision or comprehensive coverage. In most lenders it is essential for you, so that in case of an accident, you can pay off your vehicle.

There are several reasons why you would want to maintain collision and/or comprehensive coverage of your car if you own your car. Each of these reasons alone may not be worth $900, but you may want to hold several boxes.

Five reasons to consider keeping comprehensive coverage:

• In a place where the weather is unhealthy, you work.
• You live in a rural area with many car accidents involving animals.
• You live in a city with many autonomous crimes such as robbery and vandalism.
• You park your car with plenty of trees in an uncovered field.
• An emergency fix of $1,500 can't be allowed in your vehicle.

Five reasons to consider keeping collision coverage:

• You are in the highest uninsured driver rate in a state (FL, MS, NM, MI, TN, AL, WA, IN, AR, D.C.).
• You have a long and difficult way to go (and thus a higher probability to be in an accident).
• You were previously in several incidents at fault.
• Your car isn't a "beater" and you want it to stay in fine shape.
• An emergency fix of $1,500 can't be allowed in your vehicle.

Why have car insurance without comprehensive and collision?

You might read this and think: is that not the purpose of car insurance? If it's in an accident, to repair my car?

In part, yes. But many drivers do not have comprehensive and collision coverage for car insurance plans. For all vehicles and passengers, the most important type of auto insurance accounts for the damages. For example, your car insurance covers the driver's medical bill if you crash and injure another driver. And even though the collision policy does not apply to your vehicle, the expense of fixing the other driver's car will be covered by your insurance.

This is why the majority of states mandate drivers to bring auto insurance policies.

Furthermore the bank normally needs you to bear collision and comprehensive insurance if you finance or lease your vehicle. However, after your vehicle is charged completely, it is up to you to analyze the cost/benefit of purchasing the extra insurance cover.

There is much controversy whether the collision and comprehensive car insurance will be cancelled. The combination of the two has a big impact on your auto insurance premiums. This is a key issue. However, that's not always correct to do.

When you can consider dropping comprehensive and collision coverage

If you have to fix or replace your car as a result of an injury or an incident, you will be totally free of charge until you cancel your collisions and comprehensive coverage. You can drop coverage unconcerned if you have the financial means for repairing and changing your car on the basis of its book value (this can be checked online with the Kelly Blue Book).

The 10% rule

As a rule, the cost of the extra premium is more than 10 percent of the book value of the vehicle, it's thought to consider lowering collision and comprehensiveness.

However, if you do, banking savings should be taken seriously as a backup for potential maintenance or replacement.

Where to get your insurance

There are several great car insurance deals these days, but I want to mention one particular thing – Gabi. You use your current policy to do something better. Which form of policy you have, while also enjoying the same deductibles you can lower your premiums.

The insurance partners of Gabi sell comprehensive and collision insurance, so any new policy you select will cover everything you have in your current policy.

Liberty Mutual also makes covering your vehicle entirely easier without any additional money, I have noticed. Your policy is tailored only to cover the coverage you need.

For example, if you want accident forgiveness, this would add up to simple, comprehensive features like collision injury, your personal and passenger well-being after an accident, and a collision while driving a leased car. You can combine collision and comprehensive coverage in a way which makes sense for your lifestyle and budget by personalizing your policy.

Summary

Collision coverage pays for vehicle damage caused by crashes, while comprehensive coverage pays for any other vehicle damage, such as theft or flood damage.

If you have an unpaid auto loan or have rented the car, you must have a collision and comprehensive car insurance. (If you have your car straightforward, you can determine whether you have to pay for comprehensive and collision coverage.)

It makes sense to cancel comprehensive and collision insurance if:

• The monthly premium for comprehensive and collision insurance exceeds 10% of the book value of your vehicle and
• You can fix or replace your car with the cash if there is a loss.

Carefully evaluate the risks and benefits of canceling your collision and comprehensive coverage before taking the plunge.