Collision and Comprehensive Coverage

Not a single state in the country requires drivers to carry comprehensive or collision coverage in their car insurance policies. This mandate usually comes from the lender with a car is financed.  Here’s how the two types of coverage break out:

Collision coverage is what most people usually think about when they think of car insurance.  It pays to repair the policyholder’s vehicle in the wake of an accident. Collision coverage kicks in regardless of whether the policyholder is at fault or not. That said, many carriers will reimburse the policyholder for their deductible if the other party is found to be at fault.

Comprehensive coverage pays for other vehicular incidents, such as fire, vandalism, natural disasters, damages from theft or as a result of hitting a deer. 

This portion is typically the most expensive part of your coverage, and if you’re looking to lower your insurance costs, this is the place to do it.  Choosing a higher deductible can make a big difference in your premiums, and it’s the smart choice for the majority of drivers. But before getting carried away, keep in mind the trade-off you’re making: After every mishap, big or small, you’ll be required to pay out of pocket up to amount of that deductible before the insurance company kicks in a dime.

If the cost of the repairs needed by your car get to be too high, the insurance company has the option to consider your car “totaled.” Usually they will total your car if the repair costs exceed a certain percentage of the car’s worth—and that percentage can be as low as 55%.  If your car is totaled, know that insurance companies will rarely pay you more than your car’s book value (even if you owe more on your car than the car is worth). So before buying your insurance, we think it’s a good idea to check Kelley Blue Book to see what your car is worth.  Always avoid buying coverage that exceeds the amount the insurance company would be willing to pay you should your car be stolen or totaled.

Gap insurance is a coverage that will cover a shortfall between the vehicles value and a payoff.  There are still certain parameters, but in general the Gap coverage will cover the difference.