Understanding The Intricacies Of Insurance

When To Get Collision And Comprehensive, And When To Skip Them

Collision coverage and comprehensive coverage are two car insurance coverages that protect against damage your vehicle might sustain. Collision covers accidents that involve multiple vehicles, and comprehensive covers other causes of damage. Here's when these two coverages are helpful and when you might not need the protections.

You Lease or Finance: Get the Coverages

If you lease or finance your vehicle, you'll almost certainly need both collision coverage and comprehensive coverage. Dealerships and lenders include a requirement in the terms of their leases and loans so that the institution's interest in a vehicle is protected even if the vehicle is damaged.

For instance, collision coverage will help reimburse a lease or lien holder if your vehicle is totaled in an accident. Comprehensive coverage will do the same if your vehicle is totaled in a different type of incident, such as by hitting an animal or a tree falling on top of the car. 

Without these coverages in place, a dealership would have to sue you for the balance on your lease or loan if your vehicle was totaled. Lawsuits, of course, are time-consuming and expensive. Ensuring that you carry these two coverages is a much more efficient way to ensure a lien holder can be compensated and you don't have to worry about a lawsuit.

You Drive an Expensive Vehicle: Get the Coverages

If you drive an expensive vehicle, you should probably carry both collision coverage and comprehensive coverage even if you own your car outright. The coverages will make sure you can afford to replace your vehicle with a like one if your vehicle is totaled in a covered incident.

There isn't a specific dollar amount that determines a vehicle is expensive enough to carry these coverages on. Instead, the measure is relative to your financial position. If you couldn't personally buy a new car like yours with cash, then your vehicle is expensive enough for you to fully insure with these protections.

You Drive a Somewhat Cheap Vehicle: Consider Forgoing the Coverages

Conversely, you might want to forgo collision coverage and comprehensive coverage if your vehicle is somewhat cheap and you could afford to replace it. If you're financially able to purchase a similar vehicle, you might be able to save a few dollars on your car insurance by skipping these protections.

You Drive a True Beater: Forgo the Coverages

If you drive a car that's so cheap it's not worth more than the deductible on these two coverages, there's no reason to carry comprehensive and collision coverage. You wouldn't receive anything from a claim since the vehicle is worth less than a deductible. Click here for info about auto insurance.