Do You Really Need Both Collision and Comprehensive Insurance?

Drivers don't want to have too much coverage -- or too little.

The right auto insurance provides protection from financial calamity. After all, accidents can happen to anyone, and most people can't just pay to repair or replace their vehicle out of pocket if something goes wrong.

But sometimes it can be difficult to understand exactly what types of coverage are necessary to get the right protections in place. In particular, many drivers wonder whether it's necessary to purchase both collision and comprehensive insurance from their auto insurer.

What's the difference between collision and comprehensive insurance?

Although comprehensive insurance may sound like it covers everything, including collisions, the reality is these two types of insurance are extremely different.

Collision insurance provides coverage for a driver who causes a motor vehicle crash. For example, if a motorist causes an at-fault accident, the motorist may damage their own car along with the vehicles of others. The at-fault driver's liability insurance would pay for the repairs or the replacement of the other involved vehicles (except in no-fault states). And the at-fault driver's collision insurance would pay for fixes to their own vehicle.

Comprehensive insurance, on the other hand, wouldn't cover damage caused by a collision at all. But it pays for most other things that could go wrong with a car -- hence the name. Comprehensive coverage would pay for fixes in situations where a tree fell on the car, for example, or if the windshield glass was damaged by a stone that was kicked up on the road, or if the car was stolen.

Why do most drivers need both?

Since collision insurance and comprehensive insurance cover different kinds of calamities that could potentially befall a vehicle, having both types of coverage is important. Without having both kinds of insurance protection in place, it's possible something could go wrong with the car that is not covered.

Most drivers can't afford to pay thousands of dollars for repairs to their vehicle if they are at fault for causing a crash -- but that's exactly what they'd need to do if they caused an accident without collision insurance. But they also likely can't afford to pay to replace their car out of pocket if it's stolen or crushed by a falling tree, so comprehensive insurance is required as well.

The one possible exception, however, is in situations where a car has limited value. Typically, neither collision nor comprehensive insurance is required by law, so drivers can choose to buy this coverage or forgo it (although auto loan lenders may mandate this coverage, and it may be required if the car is leased). If the car is worth little and the insurer would hardly end up paying out any money to repair or replace it in the event of a covered loss, then it's possible neither type of protection would really be needed.

Drivers should think about whether they could afford to replace their entire car if something went wrong or if they'd rather pay premiums to shift these costs onto insurers. In most cases, this will lead to a decision on whether collision and comprehensive coverage are worth buying.