In the USA, every state requires car insurance with two exceptions: New Hampshire and Virginia. However, in Virginia, you must pay a $500 fee or provide proof of financial liability and in New Hampshire, you need approval from the state Department of Motor Vehicles (DMV), a self-insurance certificate, or a deposit of funds.

In states that do require car insurance, the minimum policy typically demands coverage for injury to others or damage to someone else’s vehicles or property. However, no state requires that you protect your vehicle through comprehensive or collision coverage. Yet, lenders generally demand that you carry these coverage types on your car insurance policy if you want your vehicle to be financed. So it’s important that you know what compressive and collision coverage are and what they cover.

Comprehensive Insurance

Comprehensive insurance covers damage to your vehicle caused by everything else outside of a collision. Examples of the damage it handles include the following:

  • Vandalism, such as a thrown rock that cracks your windshield.
  • Collisions with an animal, such as a large moose or cow.
  • Riots and civil disturbances.
  • Falling objects, such as a tree falling on your car during a windstorm.
  • Explosions.
  • Floods.
  • Fire.
  • Theft of the entire vehicle or parts, such as the catalytic converter.

If an item that is not part of the vehicle, such as a camera or laptop, is stolen from your car, that theft is covered by your homeowner’s insurance.

Collision Insurance

As the name implies, collision coverage takes care of damage to your vehicle if you hit something, such as another vehicle, a telephone pole, or a tree. It also covers you if somebody else hits you, you hit a pothole, or your car flips.

Keep in mind that collision insurance does not cover damage to the other vehicle if you are at fault in an accident. Instead, your liability insurance will pick up the bill. If the other driver is at fault, his or her liability insurance covers your repair bills. If the other driver lacks liability insurance, your collision insurance takes care of the repairs.

One advantage of having collision insurance, beyond the monetary coverage, is that you typically deal with your own insurer rather than with another person’s insurance company who has no interest in managing your claim. You can also begin repair immediately after contacting your claims adjuster instead of waiting on the other driver’s insurance to investigate the claim and handle the paperwork.

Repairs and Payments

Both collision and comprehensive insurance pay to either:

  • Repair the damage to your vehicle
  • Or replace your vehicle if repairing the damage costs more than your car is worth. In other words, if your vehicle is totaled or a total loss. You will not receive more than the policy limit, which is the current value of the vehicle. At most, you will receive the depreciated value, which is never enough to buy the newest version of the car.

You may be able to keep the totaled vehicle, but the salvage value is deducted from your settlement. Laws vary but either you or the insurance company must inform your DMV that the vehicle has been totaled. A term similar to “salvage” or “rebuilt” then appears on the title along with descriptions like “flood damage” or “fire damage.” This protects would-be buyers who would otherwise not know about the vehicle’s damage. You cannot legally drive a car with a “salvage” title on the road.


Forbes reports that across the country, the average annual cost for collision insurance is $363 while the average for comprehensive is $160, according to the National Association of Insurance Commissioners. However, the cost of collision and comprehensive insurance varies by state. Within each state, your premiums depend on the market value of the vehicle and the deductible you choose.

The deductible is the amount you pay out of your own pocket before insurance kicks in. For example, assume you have a $500 deductible for comprehensive insurance and a flood produces $2,000 worth of damage to your vehicle. You are responsible for paying $500 while insurance pays for $1,500.

Lowering Your Premiums

Car insurance can be expensive, especially if you add in the premiums for comprehensive and collision insurance. You can lower those premiums by doing the following:

  • Pick a less expensive vehicle. Cars that cost less have lower premiums for insurance because they’re cheaper to replace.
    • For 2021, reported that the cheapest cars to insure are the Chrysler Voyager L with a national average annual premium of $1,272, the Honda CR-V LX at $1,285, and the Mazda CX-3 sport at $1,285.
    • Compare those premiums to the ones for the most expensive cars to insure, which include the Maserati Quattroporte S GranSport at $4,823, the Maserati Ghibli S Q4 GranSport at $4,208, and the Tesla Model S Performance (Plaid) at $4,143.
  • Buy a used vehicle. The value of a new car can depreciate by as much as 30 percent after the first year, so if you buy a vehicle that is at least a year old, you’ll be insuring something that is almost a third cheaper to replace.
  • Go with a higher deductible, such as at $500 or $1,000, which will have lower premiums. Take the money that you’re saving with the less expensive premiums and put it in a savings account. You’ll eventually save enough to cover the higher deductible if you avoid an accident in three or more years.
  • Drop collision and comprehensive. Once you’ve paid off the loan for your car, you can put any kind of coverage you want on it, limited only by the state requirements. After your vehicle is many years old, it may cost more to insure it than it is to repair or replace it. At that point, you may consider dropping collision and comprehensive coverage to save money. Just as you did with the previous option, you can bank any money that you save, so you have a fund to make repairs when needed.

Leave a Reply