Generally, car owners purchase two types of car insurance policies. They are collision insurance and comprehensive insurance. While collision insurance covers your vehicle against any collision with another vehicle on the street, comprehensive insurance covers the losses caused by theft, accident, vandalism, etc.
Both car insurance policies have rules that govern them and protect car owners against different damages that can affect a car. Let's look at the basics of these policies and how both policies differ from each other in the world of insurance.
Types of Car Insurance
In India, there are many car insurance policies, including:
- Comprehensive car insurance
- Collision car insurance
You can ask your provider about the availability of both policies, and you can choose one based on your requirements.
Comprehensive Car Insurance: It covers a wide range of losses and is not just limited to third-party liability. A comprehensive car insurance plan protects you from the financial burden caused by any damages or losses to the car. The damage can be caused due to multiple reasons. The most common causes of damage or losses can be road accidents, theft, natural disasters, fire, etc.
Collision Car Insurance: It is not that popular in India, but some insurance providers offer a collision car insurance policy. As the name suggests, collision car insurance protects your vehicle against any losses incurred when it collides with another vehicle or an object. It covers almost all collision-related damages.
Difference Between Comprehensive and Collision Insurance
While comprehensive and collision insurance plans safeguard your vehicles from accidents and losses, these policies have some fundamental differences. You should be aware of the difference before you decide to buy one. Some of the differences between comprehensive and collision car insurance are discussed in detail.
Both these insurance policies provide you coverage against damages. Comprehensive insurance covers you from the damages caused by external forces like a natural disaster, theft, fire, animal collision while the car is parked, etc.
On the other hand, a collision car insurance policy safeguards the car from any losses in case of a collision with another vehicle, object, or structure.
The car insurance provider covers damages in both cases, and you can get a car insurance claim based on the car's actual cash value. In both cases, you need to pay a fixed sum of the deductible to the insurance provider before compensating you for the loss.
Cost is another factor that brings about a difference between collision and comprehensive car insurance. It would help if you ask your insurance providers for quotes for both policies. Generally, when you compare the cost of car insurance policies, collision insurance will be costlier than a comprehensive insurance policy.
The cost of both of these insurance policies is decided based on several factors like the age of the car, its condition, the deductibles you choose to pay, etc. Usually, the damages from a collision are worse than other damages. Hence, the perceived value of damages is more than that of a comprehensive insurance policy.
You can buy a comprehensive car insurance policy as a standalone policy. You can contact your car insurance company and buy a comprehensive policy for your new or used car.
However, in the case of a collision insurance policy, you cannot buy it as a standalone policy. You will have to bundle it with your primary insurance policy.
Benefits and Drawbacks of Buying a Comprehensive Car Insurance Policy
Let's understand some benefits and drawbacks of buying comprehensive car insurance.
- A comprehensive policy safeguards you from all kinds of damages, usually not under your control.
- A comprehensive policy also protects the car from any third-party damages
- It is considered a good option as it covers many losses.
- A comprehensive car insurance policy does not safeguard your car from damages arising due to a collision.
- It does not cover the car's cost of wear and tear, depreciation, etc.
Benefits and Drawbacks of Buying a Collision Car Insurance Policy
Collision car insurance comes with its own set of benefits and drawbacks. Knowing these aspects of your car insurance policy will help you make quick decisions.
- It covers damages caused by a collision of the car. The collision includes a collision with a moving vehicle or a stationary object.
- It covers the damaged vehicle's repair cost and protects you from unexpected collisions.
- Collision car insurance does not protect the car from any third-party damages. Hence, you need to buy another car insurance to cover those liabilities.
- Collision insurance does not include any damages beyond collision. It will not protect your vehicle against fire, etc.
- You cannot buy a standalone collision plan as you have to club it with a comprehensive insurance policy.
Which is Better: Comprehensive or Collision?
While both plans have something unique to offer, you must analyse your needs before buying one. In India, you cannot buy a standalone collision insurance policy. You can bundle it along with the comprehensive insurance policy.
Therefore, you must choose between buying a comprehensive insurance plan with collision insurance or a plan without collision insurance.
Below are some factors that can further help you decide on the right car insurance policy for yourself.
Factors to Consider Before Choosing an Insurance Policy
While a collision or a comprehensive insurance policy has benefits, you need to factor in some important aspects that will help you choose.
The Value of the Car
The car's value directly impacts the cost of its repair or maintenance. If it's a new car, you already know the perceived value of the car. However, if the car is old, you need to calculate the market value of the car by factoring in elements like depreciation, etc. Insurance coverage will protect your car from different losses as you will not have to pay for these losses from your pocket.
The risks to which your car is exposed are determined in different ways. Insurance policy providers will consider the frequency of vehicle usage, the duration for which the policyholder drives a car in a day, etc. Also, some policies factor in elements like higher traffic, roads where accidents happen, etc., for determining the risk involved in the insurance policy.
Paying for car insurance policies requires a long-term commitment. Also, if your car suffers any losses or damages, the cost of covering the losses is considerable.
Hence, you should assess your financial situation before buying car insurance. If you have a steady flow of income, you should opt for paying insurance premiums as accidents are unpredictable and the repair cost can be high.
Consider the area where you live and the place where you frequently travel for work or any other routine activities before buying a car insurance policy. When analyzing the locality, you must factor in events like theft, falling of branches from trees, etc.
It is a fact that some locations are more dangerous than others. Consider different aspects of the area, and based on these factors, buy an insurance policy for your car.
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