Coverage explained
Two coverages for your own car, two very different sets of events
Collision and comprehensive are the two coverages that repair your own vehicle. They are optional under state law but usually mandatory under a car loan or lease, and choosing between deductibles is where most drivers over- or under-buy.
If your car struck something, or something struck it while it was moving in traffic, that is collision. If the loss happened without a crash — a tree fell on it, it was stolen, hail dented the roof, a deer ran into the road — that is comprehensive.
Insurers apply the distinction consistently, and it matters because the deductibles are often different: comprehensive deductibles are frequently lower, and glass claims are sometimes handled with no deductible at all.
The deductible is the part of a covered claim you pay yourself. Moving from a $500 to a $1,000 deductible reduces the premium, but only makes sense if you could pay the higher amount from savings tomorrow without borrowing.
Work out the annual saving, then divide the extra $500 of risk by that saving. If it takes several years of savings to fund one deductible increase, the trade is worthwhile only if you rarely claim.
Once you own a car outright and its market value has fallen close to the sum of a year's physical-damage premium plus your deductible, the coverage is buying you very little. Check a valuation source for your exact year, mileage, and condition before deciding, and never drop it on a financed car — the lender will buy expensive force-placed coverage and bill you.
If repairs exceed a state-defined share of the car's value, the insurer declares a total loss and pays actual cash value instead: the market value immediately before the crash, not what you paid or what you still owe. You can request the valuation report and challenge it with comparable local listings.
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