In the world of auto insurance, there are two basic types of insurance – the kind your state requires, and everything else. Depending on where you live, the state-mandated insurance will include liability for medical payments and damages for other people and their cars and/or property if an accident is your fault. In some states, you are also required by law to have coverage that will pay for medical care or damages if you are hit by an uninsured motorist. This is all very well and good, but there are other types of insurance, not required by law in any state, that you should still have, especially if your vehicle is leased or financed.
Voluntary coverage falls into two general categories: collision and comprehensive. Here’s a description of each.
Collision insurance pays for damages to your vehicle when you are the person at fault in an accident. Standard policies will cover repairs up to the fair market value of your car, but it’s important to remember that this value may be lower than the cost of replacing the actual car, if your car is very new. If your car is leased or financed, you may wish to consider gap insurance as well.
As with all insurance, collision insurance has a deductible – a specific amount that you must pay out of pocket before the insurance “kicks in.” A lower deductible will mean higher premium payments, and vice versa, so consider what you may have to pay once as opposed to what you will have to pay regularly when setting up your policy.
Collision insurance coverage pays for damage caused to your vehicle in an automobile accident, when you are “at fault”. A standard collision automobile insurance policy will pay for any repairs up to the fair market value of your car.
Comprehensive insurance is similar to collision insurance in that there is a deductible and that the coverage will pay for repairs up to the fair market value of your car, but instead of covering damage specifically from car accidents, it covers damage caused by “acts of God,” (which is the legal way of saying “elements of nature that can’t be controlled”) or unknown parties.
Examples of the items covered under most comprehensive insurance policies include:
Along with coverage for all the items listed above, comprehensive coverage often includes a list of endorsements, which cost extra money, but provide additional benefits. Common endorsements attached to comprehensive insurance policies include:
- Auto towing – having your car towed whenever you need it.
- Auto glass insurance – either lowers or removes the deductible for repairing broken windows – including the windshield – on your car
- Rental insurance – will pay for the cost of a rental car if your car is having damages from a covered event repaired.
- Roadside assistance – emergency assistance for roadside issues, including towing if your car breaks down in the middle of nowhere, or having a flat tire changed, but any repairs made at service stations will have to be paid for by you.
These endorsements, combined with both collision and comprehensive insurance, keep your car safe when you are at fault in an accident, or even when your car is a victim of the forces of nature. All policies vary in terms of what the deductibles are and exactly what is covered, so be sure to ask for a quote, and then ask about discounts when you speak to an agent.