Choosing car insurance can be a confusing process. There are many options that are included in the total policy that affect the bottom line price. Two important components that are often misunderstood are comprehensive car insurance and collision car insurance. Depending on the individual insurance situation, both may be required. One common case is when a car owner is making payments on the vehicle to a dealer. Dealerships may require that car owners add comprehensive and collision insurance to the policy in case they have to reclaim the car due to non-payment. If there are mishaps concerning the car, the dealership is assured that the total loss will not be realized. This is also good for the car owner because he or she is liable for the full amount of the loan regardless of the car's status.
Collision car insurance is exactly what it sounds like, coverage in the case of collision while driving. This collision could, and most commonly is, with other cars on the road. Collisions could also occur with stationary objects like trees. Collision coverage should not be confused with liability insurance, which pays damages to people involved in accidents who are not at fault. For example, collision insurance will pay to repair your car if you were the cause of the accident - e.g. you run a red light and hit a vehicle with the right of way. Your liability insurance will pay for the damages caused to the other person's car and the hospital bills incurred due to that accident.
Comprehensive car insurance basically covers everything that collision insurance does not. If your car is stolen, damage or destroyed by severe weather or water, vandalized or otherwise damaged due to events that occur when it is not being driven, comprehensive insurance will pay for the necessary repairs. Comprehensive coverage usually does not cover vandalism by family members or employees, tires, theft of the vehicle's contents, or damage caused by neglect. It also may not include glass breaks. If you think you need these types of coverage, ask the insurance provider if that is included in the policy, and if it is not, ask if it is possible to add the coverage.
Remember, collision and comprehensive car insurance is important for owners of financed vehicles. In the event of theft, the loan company will still hold you responsible for the loan payment. Most insurance companies offer gap coverage that will pay the remainder of a loan of a totaled or stolen vehicle, but if the pay off amount of the loan is less than the car's estimated value for insurance purposes, this coverage is not important to have.