Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 26, 2021

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An auto insurance policy is broken down into two basic parts. Liability coverage, which is mandatory in most states, and physical damage, which isn’t mandatory in many cases.

Liability coverage pays for damage you cause to another driver’s property and/or their injuries, while physical damage covers your own vehicle.

The term ‘full coverage’ refers to having both liability and physical damage insurance on your auto insurance policy.

Physical damage coverage is further separated into collision coverage and comprehensive – or other than collision – coverage.

These two common types of coverage are often sold together, but don’t necessarily have to be.

The difference between the two is often misunderstood, but important to understand.

Collision coverage can best be described as any event that results in the ‘upset’ of a vehicle.

This includes any time your car collides or runs into something while you’re driving, or if something runs into it.

Of course, if another car runs into you, and it’s their fault, their liability coverage comes into play.

Comprehensive coverage on the other hand is anything other than collision; you may have heard that thrown around a few times when looking into buying your policy. This means that in the event an object or animal causes damage to your car, and you have comprehensive coverage, your insurance company will help you.

Below are some examples of both types of what we consider to be valuable coverage.

What are some examples of events that trigger collision claims?

– You lose control of your car while driving and run into a tree

– You collide with another vehicle, and the accident is your fault (the damage to the other vehicle is covered by the property damage liability portion of your policy)

– You return to your car in the grocery store parking lot and a shopping cart has been run into it (and nobody left a note taking responsibility)

– You back into a cement poll in a gas station parking lot, denting your bumper

On the other hand, comprehensive insurance covers damage to your vehicle caused by anything other than a collision (thus the name), as long as the cause of loss is not specifically excluded in your policy.

For example, even though the odds are slim, damage caused by war is specifically excluded in your policy. If a nuke falls on your vehicle, it wouldn’t be covered. However, should you be caught in a natural disaster such as a tornado or earthquake, you would be protected.

Your policy will not specifically define other than collision losses, but let’s consider a few common scenarios.

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What are some common examples of other than collision losses?

– You hit a deer (this example is often confused for a collision loss)

– A tree branch falls on your car and dents the roof

– Your car is pelted by hail or other weather-related damage is dealt to your car

– Your car is damaged in a flood, or maybe you leave the window down in a bad storm

– Vandalism/theft

Earlier we mentioned that physical damage coverage is not made mandatory by your state department of insurance.

But if you have a loan on your car, the lender, or lien holder, often requires it in order to protect their investment against a total loss.

The thought process is that you may not continue to pay on a loan if you destroy the car and there’s no insurance in place to repair/replace it.

Contact your insurer or independent agent if you are unsure about coverage on your current policy. It’s true that having both types will increase your insurance rates, but the average cost is still going to be less than anything you would have to pay out of pocket in order to fix your vehicle.

This is why it is sometimes required – the cost of repairs could cause you to default on payments to your lender should be have a lease, or you may choose not to repair your vehicle at all if you own it.

The market is also quite competitive; should you be curious what the average cost of auto insurance coverage is across the board, for informational purposes you can always talk to insurance agents or visit websites to compare prices.

Don’t wait until the last minute (that is to say as you’re sitting in your car after having hit another driver) to figure out what type of auto coverage you have. Knowing the ins and outs of your auto policy will be just as much an asset to anyone involved as it is to you.