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 person’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 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.
Examples of events that trigger collision claims are as follows:
– 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.
Your policy will not specifically define other than collision losses, but let’s consider a few common scenarios.
Common examples of “other than collision” losses include:
– You hit a deer (this example is often confused for a “collision” loss).
– A tree falls on your car and dents the roof.
– Your car is pelted by hail.
– Your car is damaged in a flood, or maybe you leave the window down in a bad storm.
Earlier I 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.