As common as auto insurance may be, when it comes to actually buying coverage, most people find it to be a very daunting experience. This is because there are usually a large number of auto insurance questions on your mind and it’s easy to feel uncertain about what you need and what you’ll actually be receiving.
To help better understand your protection, here is a brief explanation of the two most frequently confused elements of car insurance: comprehensive coverage and collision coverage.
Comprehensive coverage is sometimes referred to as “other than collision”. This is the part of your policy that protects you in the event of theft, a broken window, a scratch or dent while parked at a mall, damage from vandalism, or anything else that does not involve a collision.
It is what makes sure that you can obtain a payment to cover the repairs (or replacement, in the case of theft or fire, for example) that you require. In the case of replacement following a total loss, the total current value will be paid to you or the bank that has your loan for the car.
Make sure that as you build an understanding of auto insurance terms, you keep in mind that this coverage comes with a deductible. This means that for any claim you make, there is a certain amount for which you are responsible before the insurance company pays the rest.
The higher your deductible, the lower your premiums will be, but remember that this also means that in the case that you do need to make a claim, you’ll need to be able to pay that deductible. Be sure to find the right balance between the two.
You should also remember that if you make a comprehensive claim, the insurance company will not increase your premiums in the same way that would occur in the case of an act of negligence as a driver. The only time that a claim can cause your premiums to rise is in the case where you are found to be at fault and therefore you are considered to be a higher risk to insure.
On the other hand, if you’re wondering what is collision coverage, then you should know that it protects you only when the damages are the result of an accident, regardless of who was at fault. Whether this means
that you backed into a post or were struck by another car, the collision coverage will be what protects you in these circumstances.
Like comprehensive insurance, collision coverage also involves a deductible, and the size of the deductible will help to determine your premiums. In fact, the size of the deductible for collision insurance makes a much more significant difference than the size of the deductible for comprehensive coverage.
However, unlike comprehensive, collision claims can increase your insurance premiums when it comes time to renew your policy if you were determined to have been at fault.