Compare the two types of coverage to help determine what you need to protect your vehicle.

Comprehensive Insurance Coverage

Essentially, comprehensive coverage pays for repairs to your car when it’s damaged outside of an accident. This includes damage as a result of theft, vandalism, acts of nature, animals, and falling objects. Think of comprehensive coverage as an all-encompassing insurance option that protects your vehicle against physical damage caused by anything other than a collision — and protects you from having to pay for it. Below are just some of the possible scenarios that would be covered by comp insurance:

• Fire
• Earthquakes
• Explosions
• Flooding or water damage
• Theft or vandalism
• Hail or windstorm damage
• Animal impact (i.e. hitting a deer)

When it comes to comprehensive coverage, a deductible will apply to each accident. That means when you need to use it, you’ll need to pay that deductible. Here’s how it works.

• You hit a deer and it’ll cost $5,500 to repair all the damage
• You pay your deductible — say it’s $100 — and your insurance company covers the remaining $5,400 for all repairs

Think about deductibles this way. If you needed to file a claim tomorrow, how much could you afford to pay without stressing your finances? Keep your deductible close to, but below, that amount.

Collision Insurance Coverage

Collision insurance, as we mentioned earlier, exists to cover damage to your car after a collision with another car or an object, regardless of who was at fault. Typically, collision insurance has a maximum limit of liability, aka a cap on the amount you’ll be paid out. You also have to pay a deductible before the coverage kicks in, which is usually $500 or $1,000. The lower your deductible, the higher your premiums will be and vice versa.

Collision insurance is optional for most drivers, but if you lease a car or are still paying a loan on it, then your lienholder or lender likely requires you to have collision insurance.

Which is Better: Collision vs Comprehensive Insurance?

Because collision and comprehensive insurance have separate uses, neither is overall the better choice. Depending on your location and the kind of damage that your car will most likely encounter, you might find one to be more useful than the other. For instance, collision insurance will benefit people living in rougher terrain, as collision covers pothole damage as well as car-on-car collision accidents. Furthermore, city dwellers might want collision insurance to cover potential damages of getting clipped on narrow streets.

Collision coverage pays for vehicle damage caused by crashes, while comprehensive coverage pays for any other vehicle damage, such as theft or flood damage.

You must carry collision and comprehensive car insurance if you have an outstanding auto loan or leased the car. (If you own your car outright, you can decide if you need to pay for comprehensive and collision coverage.)

It makes sense to cancel comprehensive and collision insurance if:

• The annual premiums for comprehensive and collision insurance exceed 10 percent of your car’s book value and
• You have the cash available to repair or replace the car in the event of a loss.

Carefully evaluate the risks and benefits of canceling your collision and comprehensive coverage before taking the plunge.