Auto Insurance
Understanding Collision and Comprehensive Auto Coverage
A growing number of drivers assume that when it comes to insuring a vehicle, there’s a choice to be made between collision and comprehensive coverage. The truth is, purchasing both coverage options can help you better protect your financial well-being. Before you make this decision, however, it’s important to understand what each option brings to the table.
The Basics
Collision and comprehensive coverages provide financial safety nets in the event that your vehicle is physically damaged and needs to be repaired or replaced. Although these coverages are generally not required by state laws, they can reduce your financial hardship during a loss.
If you’re financing a loan for a car, your lender may require both collision and comprehensive coverage as part of your auto insurance policy.
Collision Coverage
Collision coverage pays for the cost to repair damages to a vehicle due to an accident, either with another vehicle or an object. Typically, the maximum you can collect for an accident is the actual cash value of your car, which may be less than its replacement cost.
Note that if you owe more on a car loan than your depreciated vehicle is worth, Gap insurance can cover the difference if an accident results in its total loss.
- Collision coverage is generally the most expensive portion of a car insurance policy.
- Premiums are based on a number of factors, including your deductible, driving record and the type of car you drive. If your driving record is fairly clean (no or very few tickets or accidents), your premiums will be lower because you are less likely to have a collision.
Comprehensive Coverage
Comprehensive coverage pays for damage to your vehicle caused by theft, vandalism, fire, natural disasters or hitting an animal. Repair for common damages such as windshield cracks are paid for with Comprehensive coverage.
- Comprehensive coverage comes with a deductible and the maximum payment is equal to the value of the vehicle at the time of the incident.
- To determine how much your car is worth, look up its value in the Kelley Blue Bookor the National Automobile Dealers Association’s Official Used Car Guide . You can then decide if your car’s value justifies the yearly premiums for comprehensive coverage.
- Comprehensive coverage has various limitations, so it’s best to review your policy carefully to make sure you are properly covered.
Tips to Help Reduce Your Auto Premiums
There are many ways to save on these auto insurance coverages. Here are four simple strategies to help you lower your costs:
- Consider raising your deductible
- Maintain a clean driving record
- Establish a solid credit history
- Install an anti-theft device in your vehicle
Talk to the Auto Insurance Experts at VTC Insurance Group
Our goal is to provide you with exceptional auto insurance products and advice to help you determine the auto coverage options that best suit your needs. To learn more, contact a VTC Insurance Group agent near you, give us a call, or visit vtcins.com.
This flyer is for informational purposes only and is not intended as legal advice.
