Do I have comprehensive and collision coverage? This is a common question many people ask themselves. Well comprehensive and collision are separate coverages, you can buy
one or the other, or both.
Collision coverage will pay for repairs to your
car in the event of an accident, no matter who is at fault. Comprehensive
coverage pays for damage from other events, like
vandalism, flood, theft or tree damage.
Typically collision and comprehensive
coverage are a good idea if you own a newer car. But once your car starts to
decline in value, you may want to cancel it.
This was actually the case for one of our customers here at American Insurance Services Agency. For this customer, we’ll call “Jane”, it was not worth it fro her to pay $400 a year for collision and comprehensive
insurance to protect her car that is valued at only $3,000. Why? Well if she made a
total-loss claim, she would pay her deductible — which is let’s say, $1,000 — and the
insurance company then pays the remainder — in this case, $2,000. So would
that $400 premium be worth it?
On the other hand, if your car is
valued at $40,000, buying comprehensive and collision coverage for $500
to $600 may be a good idea.
If you’re unsure whether collision and comprehensive coverage is a good bet for your vehicle, check the NADA Guides‘ value of your car each year.