Buying a new car causes a lot of positive emotions, regardless of its class and whether it is first for you or not. In any case, you get pleasure from owning it and are ready to admire the brilliance of its painting for a long time. However, this means that time has come to think about insurance. What type should you choose – with comprehensive insurance or collision coverage?
To understand this issue, we suggest you read this guide before you make a decision. Here we have prepared all the necessary information for this. After reading this article, you can understand, wether comprehensive insurance or collision coverage will suit your situation best, so as not to lose money in the future.
Types of insurance
There are five basic types of car insurance that may be appropriate in different situations. These include collision insurance, liability insurance, comprehensive insurance, injury protection insurance and uninsured / underinsured motorist insurance.
Third-party liability insurance is the minimum requirement for a motorist to be able to drive a car. This type of insurance covers expenses that may arise in the event of an accident in case of damage to property or damage to health.
In some states, motorist injury insurance may be a mandatory requirement for insurance, which will cover additional costs associated with the treatment of injuries and subsequent rehabilitation.
This type of car insurance, such as covering an uninsured / underinsured motorist, can be provided only when an insurer with insufficient or uninsured participation has suffered as a result of an accident. You may also be in demand and financial resources in the event of a similar case.
Comprehensive car insurance
Comprehensive insurance is such an insurance plan when the insurance company will pay damages that are not directly related to the traffic accidents that have occurred. When you are faced with a choice of comprehensive or collision coverage insurance, you should understand that a comprehensive insurance plan covers various circumstances that could harm your car or you.
Comprehensive coverage can cover incidents such as the effects of natural disasters resulting in damage or loss of your vehicle, theft of a vehicle or other property from it, vandalism, fires, animal collisions and many other situations that may not be directly related to use the car and traffic. Almost any incident covers a comprehensive coverage insurance plan. Often, such an insurance plan is used when renting a car, as well as when you buy it on credit.
The advantages of comprehensive car insurance are that virtually any surprise that is difficult to foresee will protect your car and your finances from loss.
Also, when choosing comprehensive insurance or collision coverage, please note that comprehensive plans often have lower deductibles, that in the future, when an insured event occurs, you will spend less money from your pocket. Comprehensive coverage is a great way to protect your investment. Especially if you have a car with a high safety rating, then your insurance payments may be even less.
However, before you purchase a comprehensive coverage insurance plan, it is worth considering some points. Not all insurance companies have the same coverage policy and in the contract you need to read all the conditions and footnotes in small print, which may indicate those conditions under which they do not cover certain losses. This can often depend on the area where you live, where certain natural disasters can often occur and the insurer does not cover their consequences.
In addition, evaluate your car and the risks associated with it. What safety rating does he have? How often and how expensive is it to be repaired? All these factors can increase the cost of comprehensive coverage for you to such amounts when it loses all meaning. Before you decide on the comprehensive or collision coverage insurance, remember that comprehensive coverage usually pays off only to the market value of your car.
To make it easier for you to determine, calculate the market value of your car and the cost of annual insurance. In order for comprehensive coverage to make sense to you, as a rule, the cost of an annual insurance policy with comprehensive coverage should not exceed 10% of the market value of the car.
Who is most suitable for a comprehensive car insurance policy
Ideal insurers for a comprehensive insurance policy can live in places likely to be natural disasters, with a low level of security and high criminal activity, without a garage, as well as owning a car with a high safety rating and high cost. In such circumstances, coverage with comprehensive coverage would be the right solution.
Collision coverage insurance
Collision coverage Insurance covers damage from all collisions during road traffic, trees, chippers and potholes. Collision coverage is usually not a mandatory type of automobile insurance in the US, but if you buy a car on credit, your lender may require such insurance and most likely will do so in order to reduce financial risks for yourself.
If you do not pay for such an insurance policy yourself, then its cost will most likely be added to the cost of the loan, which will expense you more, given the interest rate of the lender.
When choosing between comprehensive insurance or collision coverage you should know which cases each type of insurance covers. Of course, each creditor may have its own conditions and often they differ noticeably in some points, but most often collision coverage covers such incidents as crashing into an object while reversing, colliding with another car, hitting a telephone pole and other similar incidents.
Collision insurance is a great way to reassure you at the expense of falling into an accident. In the event of a similar incident, collision coverage also covers the other car that participated in the collision. You will do without finding additional funds to repair your car or the object to which you have driven. You do not have to take a loan for this and go through a credit check that can harm your credit score.
Many people believe that you can save on collision coverage insurance, because the probability of getting into a collision is extremely low. If you take some statistics, you can see that your probability of getting into a major car accident is about 0.4%. However, keep in mind that in most states of the United States the driver pays for the damage that caused the collision. If you are the culprit, you can get a tidy sum to pay for repairs to your and other driver’s cars, as well as possible treatment.
If you often drive on busy roads, are prone to risky driving style and do not have additional free thousands of dollars to compensate other drivers and repair the car, then you should think about purchasing an insurance policy with collision coverage. In addition, just like with comprehensive coverage, compare the cost of collision coverage of insurance and the cost of your car. Insurance for half a year should not cost more than 25% of the value of your car.
For whom collision coverage is best suited
Collision coverage will suit you if you already had an accident on the road, you are prone to risk, often drive on busy roads and often drive at night, then your risk of getting into a collision increases significantly. In such a case, it would be more profitable to pay for collision coverage insurance policy in order to protect yourself from potential large expenses.
The choice of comprehensive insurance or collision coverage is yours
In any case, no matter what option you choose, it is worthwhile to carefully and thoroughly examine all the conditions offered by the insurer, especially those written in small print.
Answer yourself all the questions that we have reviewed and make the best decision for you. If you can’t decide which option suits you best, ask us a question and our experts will advise you.