Comprehensive vs. collision: What do I need? | PEMCO

Even if you’re someone who’s carried car insurance for decades, would you know exactly how to answer if someone asked you to define comprehensive and collision coverages? Are you aware of how your auto insurance might need to change over time? 
 
In this article, PEMCO’s insurance experts will help explain the differences between these two fundamental auto insurance terms, and help you learn more about the coverage that’s right for you. 

Comprehensive 

Comprehensive may cover damage to your vehicle caused by events other than a collision. For example, if your car is stolen, vandalized, hit by a falling object, or damaged (for example, by fire, flood, hail, or animals), comprehensive insurance may help pay for the repairs or replacement of your car, up to the actual cash value of your vehicle.  

Comprehensive insurance is optional, unless you have a loan or a lease on your car, in which case your lender or leasing company may require it. The cost of collision insurance varies depending on your vehicle, your driving record, your deductible (see below), and other factors that are unique to you.  

Your deductible is the amount you must pay out of pocket before your insurance kicks in for a covered loss. You can choose a deductible amount when you buy your policy, though an agent might have recommendations for your unique needs. Often, the higher your deductible, the lower your premium, and vice versa.  You can change your deductible at any time.

Collision 

Collision may cover damage to your vehicle caused by a collision with another vehicle or object. For example, if you hit another car, a tree, or a guardrail, collision insurance may pay for the repairs or replacement of your car, up to the actual cash value of your vehicle. Collision insurance may also cover damage to your car if someone else hits you and their insurance is not enough to cover the loss, or if they’re uninsured or flee the scene.  

PEMCO’s insurance experts still recommend carrying Uninsured Motorist coverage (UM/UIM), even if you don’t carry collision coverage.  Learn more about uninsured motorists here. 

Collision insurance is also optional, unless you have a loan or a lease on your car, in which case your lender or leasing company may require it. The cost of collision insurance varies depending on your vehicle, your driving record, your deductible, and other factors that are unique to you.  

Like comprehensive insurance, collision insurance also has deductibles you can choose from when you buy your policy. The same principle applies: often, the higher your deductible, the lower your premium, and vice versa. Remember, you can change your deductible at any time.

Choosing coverage that's right for you 

Here are some factors to consider. As always, we encourage you to call PEMCO for a free policy review to ensure you have the coverage that fits your needs and that you’re currently receiving the discounts and opportunities for which you may be eligible.

• Your vehicle's value. If your car is new (ish), expensive, or rare, you’ll likely want to have comprehensive and collision insurance to protect your investment.  

• Your vehicle's usage. If you drive your car frequently, especially in areas with high traffic, bad roads, or severe weather, you’ll likely want to have comprehensive and collision insurance.   

• Your budget and savings. As mentioned above, the size of your deductibles has an impact on your premium. Consider your current financial situation and what your budget may look like in case you need to make a claim. This should be a large factor in your insurance decisions.  

Essentially, it comes down to this: Are you willing to pay the total cost of repair or replacement in the event your car is damaged or totaled? If not, then you’ll want to pursue these coverages. 

An importnat note: Making a claim can have an impact on your future premiums and future insurability. Every claim should have a cost-benefit analysis. For example, is it worth it to use your insurance for a smaller claim like a rock chip or windshield replacement—and not have to pay out of pocket for the repairs—if it has an impact on your premium in the future? It’s also important to consider the cost of your deductible vs. the cost of paying for a covered claim out of pocket. 

There are many personal considerations that must be made as you navigate the world of auto insurance. 

At PEMCO, we know we’ve done our job well when our customers understand the product (in this case, car insurance) that they’re paying for. Some people go their whole lives without really understanding what terms like these mean, and we get it. Insurance isn’t fun! But our goal is to make sure you’re adequately protected and equipped with the knowledge you need to understand your insurance. Why? So you can worry less and live more! 

(Remember, these definitions are simplified and therefore not legally binding. Your policy will have more details about your specific coverages and exclusions. To learn more about your specific policy, you can log into your PEMCO self-service account or talk with your local PEMCO agent.)