Collision Insurance and Comprehensive Insurance for Your Car

Posted on: May 24, 2022 | | Written by:

Collision Insurance and Comprehensive Insurance for Your Car

Car enthusiasts take a lot of effort to keep their cars in top notch condition. Ensuring regular maintenance of the car, cleaning it on a daily basis, and driving their car with utmost care are some of the ways to ensure that. Yet that might not always be enough to safeguard your car. This is where acar insurance policy comes into the picture. A car insurance policy allows you to take utmost care of the car and protect it from all contingencies. However, it largely depends on the type of policy that you opt for your car. A couple of car insurance policies that are quite famous are comprehensive car insurance and collision insurance. Here are all the details that you need to know about them.

What is Comprehensive Insurance?

Comprehensive car insurance is one of the most famous insurance policies. As the name might give away a bit, it offers a wide range of benefits. The coverage of the policy is not limited like a third-party liability policy. A comprehensive plan ensures financial protection against any damages or losses that the insured vehicle incurs. The damages or losses can be due to accidents, explosions, fires, man-made disasters and so on. Buying comprehensive insurance and collision insurance along with third party car insurance will offer you the maximum coverage. You can still make your policy a bit more robust by adding riders to the policy. Some of the more popular riders include zero depreciation cover, roadside assistance cover, no claim bonus cover, engine damage cover, etc.

What is Collision Insurance?

Collision insurance is a popular choice of car insurance in other countries,butitis not available in India. However, comprehensive insurance offers most of the coverages that collision insurance does. In countries where collision insurance is available, it is a policy that offers coverage for your vehicle, for all the damages that are a result of a collision. The collision could either be with another vehicle or an object. Also, comprehensive insurance and collision insurance are two different types of insurance, in the countries that they are available. While comprehensive insurance offers financial protection for your car in the event of damages due to theft, fire, explosion, vandalism, hail, etc. On the other hand, collision insurance offers coverage for all the damages to the insured vehicle due to a collision.

Differences

Though bothinsurance policies offer financial protection for your car, they are slightly different in some aspects.

• Coverage

Comprehensive policy covers damages due to fire, vandalism, animals, floods, cyclones, hurricanes, etc. these include natural disasters as well as man made disasters.

Collision insurance covers damages due to collision with another vehicle, damages that your car incurs due to hitting a pothole or a tree, damages due to collision with a boundary or building, etc.

• Cost

Comprehensive insurance is slightly heavier on your pockets when compared to collision insurance policies.

Both the policies belong to the bundled plan and are needed for leased or financed cars.

Comprehensive Policy: Pros and Cons

Before you opt for a comprehensive policy, you must be aware of some of the pros and cons of the plan.

• Pros

• The plan offers and pays for legal protection against any third party entities

• It offers you complete peace of mind and maximum coverage against unforeseen events

• Protects your car from a lot of potential mishaps that you might not have any control over.

• Cons

• The policy does not cover the depreciation of the car, normal wear and tear of the different parts, mechanical or electrical failure

• The policy does not cover damages due to collision (this is not applicable to the policies in India)

• The plan does not cover a third-party liability policy and you must buy the same separately (in India, the third party liability policy is bundled along with comprehensive insurance)

Collision Policy: Pros and Cons

The following are some of the pros and cons of opting for collision insurance.

• Pros

• The policy covers damages that are due to collisions with other vehicles or stationary objects

• It is an ideal policy to have, due to the stark possibilities of collision with other vehicles

• The policy takes care of the financial expenses that you might have to pay for, on the front of damage repair and other expenses as well

• Cons

• The plan does not include third-party liability insurance, thus you would need to buy it separately

• You cannot buy a collision plan as standalone insurance. It must be bought along with a comprehensive insurance

• The policy does not cover some other incidents that are beyond your control, such as natural calamities or man-made disasters.

Deductibles

Most car insurance policies have deductibles in some form. Usually, deductibles are either mandatory or voluntary. In simple terms, a deductible is an amount that you must pay from your pocket, every time you file a claim. Comprehensive insurance and collision insurance are two different types of insurance and so are the deductibles for both of them. You can opt for a higher deductible for your policy, as it will help you reduce the premium amount for the policy. Yet, this is also a tricky party. While you would want to reduce the premiums, it would result in a higher payment from your pockets, if there is a claim. Arriving at a good balance between lower premium and lower from pocket payment is important. If you are someone who does not claim their policies much, you can opt for a slightly higher voluntary deductible.

Which is Better?

Comprehensive insurance and collision insurance plans are both optional coverages and not mandatory. However, there are a few conditions where opting for both policies makes for a strong case. Here are some such scenarios.

• You have a new car, and its market value is quite high as well

• Your area of residence is prone to a lot of natural calamities or man made disasters or collisions with animals

• You want complete peace of mind and financial protection in the event of a collision and the repair costs due to it

If your car’s market valuation isn’t all that high, you can opt for either one of the policies. However, it is always a good idea to be adequately insured, rather than being underinsured. You can opt for riders to further enhance your policy’s coverage and capabilities. When you buy a car insurance policy, ensure that you consider all the factors before zeroing down on a policy. Opting for a car insurance policy with the lowest premium might not be the best choice always.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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