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Comprehensive Or Collision���What Auto Insurance Covers What?

By Compuquotes Team on March 27th, 2008
Auto Insurance

Comprehensive and collision auto insurance are often mistaken and confused for each other. Collision insurance protects you when your vehicle is in an accident--a motor vehicle collision. Comprehensive insurance covers for other things that go wrong, such as fire, theft, vandalism, disasters, acts of God and impacts with an animal.

Comprehensive auto insurance does not cover any damage sustained in a collision. For the best protection for your vehicle, it is best to have both collision and comprehensive added to your policy. Comprehensive, also sometimes called 'other than collision insurance', has deductibles just like collision. A deductible is an amount of money that you have to pay before your insurance picks up the bill. You can easily save money on your comprehensive insurance by raising your deductible, but that will mean if you have a claim that you will have a bigger out of pocket expense.

If you do have to file a claim on your comprehensive insurance, it will reimburse you up to the fair market value of your vehicle, which could be considerably less than the cost of replacing your vehicle. For this, you could invest in GAP insurance, which will pay the difference. If you lease or finance your current vehicle, you may be required by the leasing agent or the lender to have GAP insurance.

Collision insurance covers you for motor vehicle accidents. It's common to purchase a vehicle on credit, new vehicles are quite expensive and most people can't afford to hand over the cash for the car. What happens if you are involved in a motor vehicle collision? If you have taken out a loan to purchase a vehicle and you total the vehicle, you will have a serious outstanding debt, you likely won't be able to run out and purchase a new car. This is where collision insurance comes in.

If you are involved in a collision, your insurance will pay for repairs and in the event your car is totaled, your insurance will pay cash value so you can replace your vehicle.

Your collision insurance will pay out when you are at fault in the collision-if someone else is at fault or damages your vehicle, they are responsible to pay to fix or replace your vehicle. Most often, the other person's liability insurance will cover your damages.

Collision insurance, once again, only pays for damage that was caused by a motor vehicle accident. To protect yourself from fire, theft, and other damages, you will need a comprehensive policy.

Again, when you take out collision insurance you will have a choice of deductibles. The higher the deductible, the lower your payment, however if you are involved in a collision that is your fault, a higher deductible will mean more out of pocket expenses for you.

If you have leased or financed your vehicle, chances are that the leasing agent or lender will require you to have adequate collision insurance. Many leasing agents and lenders will also require you to have GAP coverage to cover the total price of your vehicle. Make sure you find out before you drive off the lot.

It is best to have both collision and comprehensive insurance if you own a newer vehicle. Talk to your agent or broker about these two types of coverage and your vehicle.

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