Insurance 101: Automobile Comprehensive & Collision Coverage

In this insurance series, we've taken a close look at the different parts of our automobile insurance policy. So far, we've covered the parts of the liability insurance protecting other people from damage you might do to them. What about damage you do to your own car?

Let's face it - we all make mistakes. Carrying comprehensive and collision insurance coverage makes it easier to remedy the mistakes you make resulting in damage to your own automobile. The comprehensive and collision insurance coverage parts are also commonly referred to as your physical damage insurance.

If you finance or lease your vehicle the financial institution you made arrangements through has required you to have comprehensive and collision insurance. If you have paid for your car outright, you need to determine whether or not you want to have this insurance. Chances are, if your car is older with a very low book value you won't even get anything out of the insurance company after you pay your deductible. If you have a newer car, with a higher book value, it's your decision and going without physical damage insurance is a risk you assume on your own.

Collision insurance coverage protects you against damage you cause on your own. For example, if you cause an accident and hit another car, your liability will pay for the damage to the OTHER driver, but will not pay to fix your car. Your collision coverage will pay to fix your car, minus a deductible that you must pay out of pocket. Standard deductibles average $500. You can choose a deductible that is lower, but most companies prefer you to pick a higher deductible, especially if you have a higher valued vehicle. Just remember that the higher the deductible you choose, the less you will pay for coverage - you'll just have to pay a higher amount out of your own pocket if you have an accident. Collision insurance itself is pretty self-explanatory: if it's your fault and you collided into an object, we'll fix your car. You can expect your insurance rates to go up if your insurance company has to pay a collision claim.