Auto body repair can get expensive quickly. So, whenever possible, you should have insurance coverage that can minimize or eliminate out-of-pocket expenses. That may lead you to look into collision coverage and comprehensive coverage. Which one do you need? Or do you need both of them?
Because Quanz Auto Body helps handle a lot of insurance claims for auto body repairs, we know a few things about auto insurance. Here’s what you need to know:
Collision Insurance only Covers Collision-Related Damage
Collision insurance is aptly named because it covers the costs of repairs to your vehicle for damage that resulted from a collision. This type of coverage goes above and beyond state-mandated liability insurance, which only covers the cost of repairs (up to a certain amount) for property damage and/or medical expenses for the other party involved in a collision.
In other words, if you carry liability only insurance, and you have a single-car accident (say, you accidentally backed into a light post or hit a parked car), your insurance will not pay a dime to get your car fixed. You need collision coverage for that.
Comprehensive Insurance Covers Most Everything But Collision-Related Damage
So, collision insurance covers your vehicle in the event of an accident, but crashes are not the only reason your vehicle may need auto body repair. Body work may be required for a number of reasons:
- A tree fell on your vehicle
- You hit an animal
- Someone keyed your door
- Your vehicle was damaged by flood or fire
In order to get repairs paid for you, you have to have comprehensive insurance. (Comprehensive insurance may also cover mechanical work and/or vehicle replacement for events like severe water damage and theft.)
However, comprehensive insurance is a bit of a misnomer. If you think you could save yourself on premiums and just get liability and comprehensive coverage, then you’re still leaving yourself open for big auto body repair bills because comprehensive coverage typically does not cover collision-related damage…just everything else.
What Insurance Coverage Do You Need
For insurance coverage for nearly any event that could necessitate auto body or mechanical repairs, you may need three policies—liability, collision and comprehensive. However, paying all those premiums really only makes sense if the potential payout is high enough.
Many advisors encourage the 10% rule—only keeping an insurance policy if the annual premium is less than 10% of the potential payout. If you have a brand-new car, and collision coverage alone is $300 each year, but the value of your car if it were totaled in an accident was more than $10,000, then collision coverage is absolutely worth it. But, if you’re driving an older car that if you sold it would only fetch about $3,500, it’s a different story. $3,500 less your deductible (probably $500) is $3,000. If you’re paying near $300 for your collision insurance coverage, you may want to consider letting the policy go.