Auto Insurance: Collision vs. Comprehensive Coverage Tiering
Published by insurancenow Editorial Team
Auto insurance mandates liability coverage to protect other drivers on the road, but protecting your own vehicle involves navigating the distinct realms of collision and comprehensive policies.
Understanding the Split
Collision coverage pays for damage to your vehicle resulting from a crash with another car or object (like a guardrail). Comprehensive coverage handles non-collision perils such as theft, fire, vandalism, animal strikes, or storm-related tree damage. As vehicles age, their market depreciation alters the economics of keeping full physical damage coverage active.
The Rule of Thumb for Aging Vehicles
A classic industry guideline suggests comparing your annual comprehensive and collision premium against 10% of your vehicle's current book value. If your car is older and worth very little, paying high physical damage premiums makes little financial sense. Our consultancy helps you adjust deductibles to optimize cash flow.