Comprehensive vs. Collision Coverage

Comprehensive insurance is a type of car insurance coverage that pays to repair or replace a vehicle when it is damaged by something other than a collision, like vandalism or animals. Comprehensive car insurance coverage is never required by state law, but it is usually needed for cars that are leased or financed.

What Does Comprehensive Insurance Cover?

• Theft
• Vandalism
• Damage from falling objects
• Flood damage
• Fire damage
• Damage from animals
• Damage from natural disasters
• Glass damage, such as a cracked windshield

Comprehensive Insurance Cost

Comprehensive car insurance costs an average of $162 per year. The exact amount you'll pay depends mostly on your car's value and your deductible amount. The higher your deductible is, the less your policy will cost. You can buy comprehensive coverage by itself, but it is usually purchased with collision insurance, which covers damage caused by accidents.  

Why You Should Get Comprehensive Insurance

You should consider buying comprehensive coverage if you cannot afford to pay out of pocket to repair or replace your car in a worst-case scenario. Comprehensive insurance is usually considered to be a good investment since it's cheaper than other types of car insurance and covers events that are out of your control as a driver. A good rule of thumb is that if the cost of comprehensive insurance exceeds 10% of your vehicle's value, you can consider dropping it.

To learn more, check out WalletHub's guide to comprehensive insurance.

It is usually better to have comprehensive insurance than collision insurance, if you need to choose between the two. Comprehensive coverage is inexpensive, can be purchased alone, and covers events outside of a driver's control, such as vandalism, theft, natural disasters or run-ins with animals, among other situations.

On the other hand, drivers with a history of accidents or moving violations and drivers who live in high traffic areas should consider investing in collision insurance. Given that collision insurance cannot be purchased without comprehensive, you'll get the benefit of both types of coverage.

Why You Should Get Both Comprehensive & Collision Coverage

If your car is leased or financed, your lender or lessor will likely require you to purchase comprehensive and collision insurance together. But even if you do have a choice, you should still consider purchasing both types of coverage.

Collision and comprehensive insurance are best bought together because they cover different situations. Collision coverage repairs or replaces your car when it's damaged in an accident, regardless of fault, while comprehensive insurance applies when your car is damaged by something other than an accident.

Ultimately, if you're still struggling to decide whether to purchase comprehensive or collision coverage, a good rule of thumb is to skip either type if the cost is more than 10% of your car's value. However, this is just a general guideline, and you should also consider whether you're in the financial position to repair or replace your car if it's damaged. 

To learn more, check out WalletHub's guide to collision and comprehensive insurance.

You should drop your collision insurance when your annual premium equals 10% of your car's value. If your collision insurance costs $100 total per year, for example, drop the coverage when your car is worth $1,000 since, at that point, your insurance payments are too close to your car's value to be worthwhile. Drivers can easily find a car's value with the online vehicle appraisal calculators from Edmunds or Kelly Blue Book.

When to Drop Collision Insurance

When you rarely use your car

The more you drive, the higher your risk of being in an accident – so if you don't drive often, your risk is lower than average. That means you could be paying for collision insurance that you're unlikely to need.

When repairing a car would not have a big impact on your finances

Maybe you have an emergency fund that you could use to fix your vehicle. If you're willing to spend your savings on car repairs, then it's safe to drop collision insurance. However, people often prefer their emergency fund to be a safety net for when they leave their job, face health issues, or need home repairs. It all depends on what you're comfortable with personally and how much you have saved.

When you're paying 10% of your car's value in premiums annually

The cost of repairs goes down as your car gets older, so you don't want to overpay as your car loses value.

Other Things to Consider Before Dropping Collision Insurance

The 10% rule for dropping collision insurance is not set in stone. But it's a good milestone to keep in mind because as the value of a vehicle falls over time, the value of its insurance coverage does too. And when you start paying a significant portion of your car's value in premiums each year, you're simply overpaying to offset the actual level of risk that remains – at least as far as collision damage to your own vehicle is concerned.

Collision insurance repairs or replaces your insured car if it's damaged, whether by another vehicle or an object like a tree or mailbox. This insurance covers up to the cash value of your car - which is where the 10% rule comes in. This rule most frequently applies to older cars or vehicles with a lot of mileage, as they are worth relatively low amounts. There are a few other situations where it might be a smart move to drop collision insurance, too.

When Not to Drop Collision Insurance

Every state requires car insurance except for New Hampshire and Virginia. However, the law doesn't mandate collision insurance. The only legally-mandated car insurance is liability coverage, for damages to someone or something that you accidentally hit with your car. Although collision insurance is optional, it's well worth purchasing for many people.

If you're financing your car, collision insurance is usually required. Otherwise, you might be stuck with a repair bill equivalent to the value of your new vehicle! If you're leasing your car, the same logic applies – most lessors require drivers to carry collision insurance, too.

In summary, it's a smart money move to drop collision insurance when your car is old or has high mileage, but you should definitely think twice about doing so.

Comprehensive insurance is worth it if the premium is a small percentage of the car's value. Comprehensive insurance might also be worth it if the policyholder cannot afford to replace the vehicle without comprehensive coverage, or if the car is driven or parked in a particularly risky area.

Although comprehensive insurance is not mandatory in any state, dealerships and lenders frequently require comprehensive insurance, along with collision coverage, on leased or financed cars. In that case, comprehensive insurance is definitely worth it, because failing to meet the lender's or lessor's requirements could result in expensive force-placed insurance or even repossession.

Factors to Consider When Deciding If Comprehensive Insurance Is Worth It

• Your car's age, mileage, and value.
• The cost of comprehensive insurance premiums.
• The risk of theft, vandalism, and natural disasters in your area.
• Your ability to pay for repairs or a replacement vehicle out of pocket.

An old rule of thumb recommended dropping comprehensive coverage when a car was five to six years old or had 100,000 miles. But this rule is now outdated, since newer cars have increased longevity alongside higher repair costs. Now, the standard rule is that comprehensive and collision coverage are both worth buying if the combined premium is less than 10% of the car's value, minus the deductible.

Cost is only one factor, however, so you should also consider how likely you are to file a claim, as well as what would happen to you financially if your car was stolen or destroyed by something other than an accident and you didn't have coverage. For instance, if theft, animal collisions, or natural disasters are particularly common in your area, you are especially likely to need comprehensive insurance. Similarly, even if your comprehensive premium is 15% of your car's value, for example, comprehensive insurance might still be worth it if you rely on the car and can't afford to replace it yourself.

A good comprehensive deductible is an amount that the policyholder can afford to pay if their vehicle is suddenly damaged by something other than a car accident, such as vandalism or a natural disaster. Comprehensive insurance deductibles typically range from $100 to $1,000, but they can sometimes be as high as $2,500. You choose your deductible when you purchase your policy, and the higher the deductible is, the lower your premium will be.

Comprehensive Deductible Example

As a reminder, a comprehensive deductible is the amount that you have to pay out-of-pocket when filing a comprehensive insurance claim. For example, if a hailstorm causes $5,000 in damage to your car and you have a $1,000 deductible, your insurance company will only pay $4,000 for the repairs.

How to Choose Your Comprehensive Deductible

Before you decide on a deductible, you should consider how likely you are to file a comprehensive claim. If you live in an area that is prone to natural disasters or has a high crime rate, for instance, it may be a good idea to get a low comprehensive deductible.

A collision insurance deductible is the amount of money that a driver must pay out-of-pocket when filing a collision insurance claim. Collision insurance pays to repair or replace a car damaged in an accident, and a driver must pay their collision deductible before their insurance company will cover the remaining costs.

Collision Deductible Example

Say you are at fault in an accident that causes $10,000 in damage and you have a collision deductible of $1,000. You are responsible for covering your $1,000 collision deductible out-of-pocket in order for your insurance company to pay the remaining $9,000.

Collision Deductible Amounts

Collision deductibles typically range from $100 to $1,000, and you select your deductible amount when you purchase your policy. The higher your deductible, the cheaper your premium will be. Although it's tempting to get a higher deductible in order to pay less upfront, you should only choose a deductible that you can afford to pay if your car is suddenly damaged in an accident.

Car insurance covers auto theft and vandalism for drivers with comprehensive coverage. Comprehensive coverage is optional and can help replace your car if it's stolen, replace certain parts of your car that are stolen, or repair damage to your car resulting from theft or vandalism.

What Insurance Covers If Your Car Is Stolen

The coverage limit for claims related to theft is typically your car's depreciated value, or actual cash value (ACV). Your coverage limit is the maximum amount your insurer will pay for a claim. So, if someone steals your car, the insurance company will pay the actual cash value of the vehicle, minus your deductible. The ACV is the car's market value based on pre-loss condition, age, options, mileage, etc.

If you are financing your vehicle, the amount insurance pays may not be enough to pay off your loan or lease. If you owe more than your car is worth, you should consider gap insurance, which helps cover the difference between your car's actual value and the balance owed.

You should also keep in mind that comprehensive coverage won't pay for a rental vehicle as part of your stolen car claim. You'd need rental reimbursement coverage on your policy to help pay for transportation costs related to your car being stolen.

What To Do When Your Car Is Stolen

1. File a police report as soon as possible—ideally within 24 hours. Not only will this improve your chances of recovering the car, but you'll also need a police report to file a claim with your insurance provider.
2. File an insurance claim with your comprehensive insurance provider. Keep in mind that you will need to provide as much information as possible if you want your claim to be solved quickly and fairly.

How Car Insurance Covers Theft

Comprehensive coverage won't cover theft of your personal belongings, like your phone, laptop, or other valuables. Those items should be listed on your homeowner's or renter's insurance policy, even if you often leave them in your car.

Normal liability car insurance won't cover theft because it protects the other driver from bodily injury and property damage resulting from an accident you cause.

A collision deductible waiver helps drivers save money on their deductible after an accident with an uninsured driver. Collision damage waivers typically apply only to accidents where an identified driver without insurance is completely at fault. A notable exception is California, where collision deductible waivers can be used in hit-and-run accidents. 

When a Collision Deductible Waiver Is a Good Idea

Collision deductible waivers are similar to uninsured motorist property damage (UMPD) insurance, so a waiver is usually redundant if you are already required by your state to have UMPD. In states where UMPD is optional or unavailable, collision deductible waivers can be a great alternative for the same type of coverage. However, keep in mind that you cannot purchase a collision deductible waiver without collision insurance.

Collision Deductible Waiver Cost

The cost of a collision deductible waiver is usually less than $50 for your entire policy term. Although collision deductible waivers can only be used in a limited number of situations, their low cost means they are a good investment if you want to avoid any out-of-pocket expenses in the event that you're hit by an uninsured motorist.  

Finally, it should be noted that collision deductible waivers are different from collision damage waivers, which are sold by rental car companies to cover damage to their vehicles.

Yes, you need collision insurance if your car is leased or financed. Collision insurance is not required by any state laws, but most lessors and lenders require drivers to have it until the car is paid off. Even if you're not required to have collision insurance, you should still purchase it if you cannot afford to pay for damage to your vehicle after an accident.

Why You Need Collision Insurance

Collision insurance pays to repair or replace your car after an accident, regardless of who is at fault. If you cause an accident, collision coverage is the only way to have your repair costs covered by insurance. Even if you are not at fault for an accident, you can file a collision claim to pay for your repairs while you wait for a final determination of fault. Your insurance company will then recoup your costs from the other driver's liability insurance.

Factors to Consider When Deciding if You Need Collision Insurance

• Price of coverage
• Car value
• Likelihood of an at-fault accident
• Cost of repairs

When to Consider Dropping Collision Insurance

A general rule of thumb is that if your collision insurance premium is more than 10% of your car's value, you can consider dropping the coverage. However, this is just a general guideline. If you can't afford to pay out of pocket to repair or replace your car after an accident, then you should continue to carry collision insurance. You should also keep it if your car is particularly valuable or you live in a high-traffic area where you are more likely to get into an accident.

The difference between comprehensive and full coverage is that comprehensive insurance is just the part of full coverage that covers damage to a car from things other than accidents, like theft or fire. Full coverage usually means a car insurance policy with comprehensive, collision, and the state's minimum requirements.

Comprehensive insurance mostly covers events outside of a driver's control, or incidents that happen when a car is parked. For instance, comprehensive covers vehicle damage or replacement due to natural disasters, extreme weather events, and vandalism. When combined with collision insurance, these two types of insurance cover most incidents that could damage your car, hence the designation “full coverage.” Comprehensive and collision coverage are not mandatory in any state, but some lenders and lessors will require them on a leased or financed car.

Since every state has different car insurance requirements, full coverage can also include several other types of coverage. For example, personal injury protection (PIP) and MedPay are required in certain states, and would therefore be included in full coverage in these locations.  

Finally, remember that even a supposedly full coverage policy will not cover everything. Things like rental car reimbursement while your own car is being repaired or replaced are available separately and aren't usually included in the term full coverage.

When shopping for insurance, it's best to look past labels like full coverage and instead consider your state's laws and your own financial situation. And if an insurance agent or broker offers to sell you full coverage, be sure to clarify exactly what's included.