Full auto insurance coverage has two elements: collision and comprehensive protection. Both of them protect the policyholder’s own vehicle from physical damage.
Collision insurance protection pays for repairs to the vehicle following an accident where the driver has struck another vehicle or an inanimate object. It also covers damages incurred in a rollover accident.
Comprehensive coverage protects the vehicle owner from damages caused by events like stones striking the windshield or windows, hail, flooding and falling objects. It also pays for losses due to fire, theft and acts of vandalism.
If the car is totaled in the accident, the insurer pays out an amount based on its cash value, less the deductible the owner has agreed to pay. Full auto insurance coverage will likely be required if the owner took out a loan to pay for the vehicle, since the bank will want to make sure that its interests are protected if the car is destroyed. The vehicle owner is still responsible for covering the difference between the outstanding loan and the vehicle’s cash value in this instance.
A person who is driving an older model vehicle which has little cash value may want to consider dropping full coverage from his or her policy. Keeping fire and theft protection in place will provide a benefit if one of these losses occurs, and will help to reduce the cost of coverage for the consumer.