Here’s what you need to know – Forbes Advisor

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Liability insurance is the basis of car insurance policies. It pays for damages you cause to others and is required in almost all states.

But two other important components of a good auto insurance policy are collision damage waiver and all-risk coverage. They do something that liability insurance does not: pay for damage to your own vehicle or compensate you in the event of theft.

What does collision and comprehensive insurance cover?

Collision and comprehensive coverage are important supplements to liability insurance:

  • Collision insurance pays for damage to your vehicle if you hit an object or another car.
  • Comprehensive insurance covers damage other than accident, such as bad weather and fire. It also reimburses you for car theft and damage caused by collisions with animals.

Collision and property and casualty auto insurance are often sold together by auto insurers. Here’s how the coverage types compare.

Nationally, 74% of drivers with auto insurance purchase collision coverage and 78% purchase comprehensive coverage, according to the Insurance Information Institute.

Examples of when you could make a collision claim

  • Your car slides on the ice and hits a guardrail.
  • You swerve to avoid a squirrel and hit a pole.
  • Someone bumps your car and starts it.

Examples of when you could make a global claim

  • You hit a deer and dented your bumper.
  • A fire in your garage damages your car.
  • A hailstorm damages your car.
  • A thief steals your car and it is not recovered.

What is a franchise?

Collision insurance and comprehensive insurance generally have deductibles. A collision claim or comprehensive coverage will be reduced by the deductible amount.

Common deductibles are $250, $500, $1,000 and above. So, if you have an accident and your vehicle suffers $2,000 of damage and your deductible is $500, the insurance company will pay $1,500 for the claim.

Some auto insurers offer “decreasing deductibles” to customers as a reward for good driving. Under these programs, your deductible decreases over time if you do not make certain claims.

The maximum insurance payment

For collision and comprehensive insurance, the maximum possible payment is the value of the vehicle immediately before the accident if totaled, less the deductible amount. A car can be considered totaled if:

  • It cannot be repaired to make it safe to drive.
  • The repairs would exceed the value of the car.
  • The repairs would exceed a certain percentage of the value of the car. In many states, a car is totaled when repair costs exceed 75% of the car’s value.

And if you have a new car, don’t assume it will be harder to hit a threshold to total it. New car technology is so expensive to repair that it makes cars more likely to be destroyed in an accident.

Do I need collision and comprehensive insurance?

If you have an auto loan or auto lease, you are likely required to purchase collision and all risks by the lender or leasing company. This is so that you don’t give up your loan or lease if your car is destroyed or stolen.

Once your car loan has been repaid, collision and multi-risk will become optional.

If you don’t have to buy Collision and Property and Casualty, you may still want them. Ask yourself this: if your car was damaged or stolen, could you easily pay for repairs or buy another car. If the answer is no, collision and comprehensive offer some financial protection.

But as vehicles age, collision and comprehensive coverage may become less useful to you relative to the cost. As the value of your vehicle decreases, your maximum possible insurance payment also decreases if it is totaled or stolen, especially if you have a high deductible.

For example, let’s say you have a 2005 Honda Accord that’s worth around $3,300. If the car is destroyed in a flood and you have a $1,000 deductible, your insurance check will be $2,300. You can judge whether the price you’re paying for collision and full multi-year coverage is worth the potential benefit.

The average collision claim is $4,412.31, according to the latest data from the National Association of Insurance Commissioners. The average aggregate claim is $1,359.04.

How much does collision and comprehensive insurance cost?

Nationally, the average cost of collision coverage is $378 per year and the average cost of comprehensive insurance is $168, according to the latest data from the National Association of Insurance Commissioners. See the average in your state below.

What if someone else damages my car?

Collision coverage is good for situations where you accidentally damage your own car, like backing into a pole. But it can also be useful if someone else bumps into you. If this happens, you have two choices:

  1. Make a claim against the other driver’s liability insurance. If the accident was someone else’s fault, their liability insurance should pay for the damage to your car.
  2. Claim your own collision insurance. Maybe you don’t want to go through someone else’s insurer. Instead, you can make a claim on your collision insurance. The downside is that the insurance check will be reduced by the amount of your deductible.

What is the average repair time for a damaged car?

According to CCC Information Services, an automotive data and technology provider, collision repair, average repair time – from the time you drop off your car at the body shop to the time you pick it up – is nearly 11 days for cars. and the insurance sectors.

Average repair time has increased over the years, which the CCC attributes to greater vehicle complexity and “many sophisticated vehicles” taking longer to repair.

What about rental car insurance?

If you rent a car, your personal auto policy will generally extend to the rental, including third party liability, collision, and comprehensive auto insurance. This means you won’t need to purchase coverage offered at the rental counter, such as collision damage waiver, unless you want to avoid possible claims on your own policy. Ask your car insurance agent to confirm that your policy will also cover a rental.

Rental reimbursement auto insurance will help pay for that rental. This is an optional type of coverage that helps cover the cost of a rental car if your car is damaged in an accident covered by your insurance policy.

You will be responsible for covering all rental charges in excess of the rental reimbursement coverage limits. For example, if you have a limit of $30 per day for up to 30 days, you will have to pay out of pocket for any amount over the daily limit or over 30 days. You may be able to purchase higher limits.

What Collision and Comprehensive Insurance Won’t Cover

Although collision and comprehensive coverage, as well as liability insurance, offer a wide range of coverage, they still do not cover:

Injuries sustained in an accident. (Depending on the situation, injuries may be covered by another driver’s liability insurance, or your own personal injury protection or medical payments insurance, or your own health insurance.)

Items stolen from your car, such as a laptop or wallet. (Instead, check with your home or tenant insurance).

Auto Insurance Spotlight: Stolen Vehicles

A car is stolen every 36 seconds, according to the latest Hot Spots report from the National Insurance Crime Bureau (NICB). COVID-19 hasn’t bothered vehicle thieves. After a year of declining car thefts in 2019, car theft figures increased to 880,595 vehicle thefts in 2020 from 794,019 in 2019.

Vehicle theft rate by state

The Hot Spots report uses a theft rate based on the number of cars stolen per 100,000 people. Despite the increase in thefts in the United States, 10 states recorded a decrease in vehicle thefts as of 2019.

The full coverage portion of an auto insurance policy pays for the value of your vehicle if it is stolen, but the best defense may be a few preventative measures. The NICB recommends these four points of protection:

  • Common sense. Always remove your keys from the ignition, lock your doors and windows, and park in well-lit areas.
  • Warning devices. Consider car alarms and visual devices like column clamps, steering wheel locks, and brake locks.
  • Immobilizers. These prevent thieves from bypassing your car’s ignition system (like hot wiring). Examples include smart keys, cut-off fuses, kill switches, wireless ignition authentication, and starter, ignition, and fuel pump disablers.
  • Tracking devices. These systems typically use GPS and wireless technology to alert you if the car has moved, and they will track and monitor the vehicle’s whereabouts.

Best car insurance companies 2022

With so many choices for car insurance companies, it can be difficult to know where to start to find the right car insurance. We’ve rated insurers to find the best car insurance companies, so you don’t have to.