Auto Comprehensive and Collision Coverage
What is Comprehensive and Collision Coverage?
Comprehensive and collision coverage, or as most people say, comp and collision, is actually 2 different automobile insurance coverages. Both cover damages to the vehicle you are covering, but in different ways.
First, lets take a look at how the Texas Department of Insurance (TDI) defines each coverage.
Comprehensive (other than collision) Coverage:
Comprehensive (other than Collision) coverage, I will just use the shortened phrase of comprehensive or comp in the article, pays if your car is stolen or damaged by fire, flood, vandalism or something other than a collision.
Collision coverage pays to repair or replace your car after an accident.
We will go into each of these later in this article.
What is Full Coverage?
Many time as an insurance agent, I would have someone ask me how much full coverage would cost on their vehicle. Imagine the surprise on their face when I said there is no such thing as full coverage. They would always say that their dealership told them they needed full coverage on the car in order to leave the lot with their new car.
I would always explain that insurance cannot fully protect you from all scenarios that could possible arise from an accident, especially if you were at fault for that accident.
You see, when a dealer says you need full coverage, all they mean is that you need the state minimum requirements for auto liability coverage and, since you most likely financed the vehicle, you must also protect the car you just bought with comprehensive and collision coverage. If you remember my first article in the Automobile Insurance series, you will note that I said auto liability coverage does not cover your vehicle.
I believe it to be the responsibility of your insurance agent to explain that there is no such thing as full coverage and ask the right questions to determine the best coverages needed to meet your current situation. They should also regularly review your coverages with you to make sure your situation hasn’t changed, requiring new coverages or limits.
How Does Comprehensive and Collision Coverages Work?
To answer this question, we must break down the 2 different coverages. You may not know this, but your insurance provider may let you buy one coverage, but not the other. So, lets break them down.
Let’s refer back to how TDI defines comprehensive coverage:
All this means is that if you car is damaged by something other that your car hitting anything else, it is considered to be a comprehensive claim.
In most cases, a comprehensive claim is not considered at fault and may not affect your insurance rates. Whether or not your insurance rates are impacted is determined by your insurance provider.
One case in which a collision may be considered a comprehensive claim would involve colliding with an animal. When I lived in Mississippi, I saw many vehicles damaged by deer. You would need to check with your insurance provider to determine if colliding with animals is defined as a comprehensive claim or not.
One of the most prevalent cases of comprehensive claims is hail damage. If you do not have an enclosed garage, there is nothing you can do to prevent that damage.
When I sold insurance, I liked to explain it by saying that “comprehensive coverages covers damage to your car caused by fire, flood, theft or any acts of Mother Nature. Of course that definition isn’t all inclusive, and if they wanted to go in more detail, I would have been happy to doo so.
That is comprehensive coverage in a nutshell. If you have any further questions about comprehensive coverage, I would suggest that you call your insurance agent, as they would be best able to explain how your comprehensive coverage works under the language of your policy.
Once again, lets take a look back at how TDI defines collision coverage:
This coverage is pretty straight forward. If your collides with something, it is considered to be a collision claim. In most cases, as stated in the comprehensive coverage above, colliding or hitting an animal is considered to be a comprehensive claim.
Also, almost all collision claims are considered to be at-fault and will have an effect on your insurance premiums.
One of the most asked questions I got from clients when I sold insurance was if they hit a pothole of the road that damaged their vehicle is it considered an at fault-accident. My answer, in most cases YES. Again this depends on your insurance carrier and state, but it is considered at fault because you could have tried to avoid the pothole. I know what you are saying, sometime you can’t avoid them because they just appear out of nowhere and you didn’t see it until the car in front of you passed it and your couldn’t switch lanes because there were cars on either side of you. What that tells me, as an insurance guy, is that you were following too closely to the car in front of you and/or speeding. That may not always be the case in all such situations, but in most cases it is. Do you remember how far you are supposed to follow behind the car in front of you?
The rule of thumb is to leave at least a 3 second (about 16 car lengths) gap between the car in front of you if you are going 55 mph, and that’s in good conditions. The faster you go, the more length is needed between the cars. In inclement weather conditions, that gap should begin to get even wider.
You can learn more about safe following distances by taking a defensive driving course. Also, most insurance carriers give a discount in Texas for completing a defensive driving course. Traffic 101 offers a great defensive driving course and you can sign up by clicking here. This is an affiliate link and I will receive a commission if you enroll in one of their courses, but there is no price difference for you.
Another situation that some believe to be not at-fault is when they hit black ice and lose control of their vehicle. Unfortunately, in most cases that would be considered an at-fault accident covered under your collision coverage.
As I end this section, I have reiterate that I am not a claims adjuster and cannot say for certain whether any claim you have, no matter how similar to any situation I have described, will be adjusted and paid out as described above.
Do I Need Comprehensive and Collision Coverage?
Most people will tell you that once your car is paid off, you no longer need comp and collision. While it is true that while you are financing or leasing a car, your lender or lessor may require you to maintain comp and collision, it doesn’t mean you do not need it.
Whether you need it or not will depend solely on your ability to take on the risk of not having it. As mentioned earlier, the liability coverage that the state requires you to maintain in order to legally drive on your state’s roadways does not cover your vehicle in the event of an accident if it is your fault. Also, if the accident is not your fault, there is no guarantee that the person or persons that are at fault will have insurance.
If you can bear the burden of having to buy a new vehicle if yours is damaged and can no longer run, then by all means cancel your comp and collision coverage, but only after discussing your situation with your agent.
The age of your vehicle may also play a role in your decision. Some carriers will not pay what you think your vehicle is worth unless you have special coverages to apply to a classic car, if available.
If you do not drive your vehicle frequently and it is stored most of the year, I would suggest talking to your agent about only having comprehensive coverage while it stored and adding liability coverage during the times of the year that you drive the car. That way if something happens to your car while in storage, it will most likely be covered. Again, this may not be an option for all insurance carriers, but it is definitely worth a call to your agent to find out.
As in the previous post about auto liability coverage, I would recommend getting in touch with your insurance agent to discuss any options that may be available for you if I have piqued your interest.
Next I will talk about Medical Coverage and Personal Injury Protection (PIP) that may be available to you in Texas. You will need to check with your agent to determine if they are available to you.