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Collision vs Comprehension Insurance

Ask the Expert

Q: There are a few terms with my auto policy that I always seem to confuse. Can you better define collision and comprehensive coverage as well as how limits and deductibles impact my overall costs?

A: I find that because my clients only renew auto policies once or twice a year, remembering all the details surrounding a policy can be tough. Here's a quick reference for you to tuck away so you don't have to start your research over each time:

Collision Coverage
This is a coverage option that you can add to your overall policy. It generally pays for damage to your car due to a covered accident with another car or just about anything else (for example - stop sign). It will generally provide for repair or replacement of your car - up to the Actual Cash Value. The Actual Cash Value is determined based on many things such as depreciation of your car's value due to age, and average wear.

Comprehensive Coverage
This coverage option will usually cover damage to your car that's not caused by a collision such as being rear-ended. Instead, it will include things like damage from falling objects, theft, vandalism, explosions, earthquakes, hail and others.

Limits & Deductibles
Coverage Limit - This determines the most your insurance company will pay for a loss. Some of these limits can apply to each person while others may only apply to each occurrence. Make sure you examine this difference closely when making a coverage decision.

Deductible - This is the amount of loss YOU have agreed to pay before your insurance company will pay for the covered losses defined by the rest of your policy.

Be sure to understand that the higher you set your coverage limit, the higher your premium will be because you're asking the insurance company to provide more protection in the case of an accident. Also, the higher you set your deductible, the lower your premium will be because you will have to pay more yourself in the case of an accident.

One more piece of advice - push your agent to really explain your policy options so you can pick the best one for you. Each policy is different and although the savings can be exciting, remember the trade-off you're making with risk. Good luck finding the right balance for you!

Do you have a question for one of our agents? If so, submit it to
tips@netquote.com. Your question could be answered in an upcoming newsletter!

About the Author:

Ryan Taylor is an agent in Boulder, CO.

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