You can save money on your car insurance payments by reducing the coverage that you carry on your vehicle. The less coverage you carry, the less your insurance premiums will be. However, it’s important to carry enough insurance to meet your needs so take the time to understand exactly what your coverage does so that you can make an informed decision about what coverage to keep.

First Party vs Liability Insurance

There are two main types of car insurance coverage: liability insurance and first-party coverage. Liability insurance covers the cost of damage caused to someone else’s vehicle as well as injuries that person sustains in any accident where you were at-fault. First-party coverage, such as collision and comprehensive, pays for the repairs to your own vehicle whenever it’s damaged in a covered loss.

Drivers must carry liability insurance on your vehicle in order to comply with state laws, but there is a choice of whether or not to carry first-party insurance. If you are making payments on your vehicle, you must maintain full coverage auto insurance until the car has been paid off. At that point, collision and comprehensive coverage can be dropped if you wish.

What does Comprehensive Car Insurance cover?

Collision coverage is fairly straightforward: It pays for damages when your car is involved in a collision. Comprehensive insurance is a more catch-all category of insurance and pays for a wide variety of perils such as:

  • Flooding, Hail and other damage from Weather conditions
  • Auto Theft and Vandalism
  • Damage caused by flying or falling objects such as road debris
  • Damage caused by an animal
  • Windshield and Glass damage (such as cracked glass)
  • Fire damage of any kind except that caused by a collision
  • Damage from a shopping cart

If you’re not sure whether a certain incident is covered under your collision or comprehensive coverage, contact your insurance company to ask about specific circumstances.

Comprehensive coverage does not have fault assigned to it, so a comprehensive claim should not cause auto insurance rates to be affected as much as a collision would. Comprehensive coverage also is cheaper to add to a policy than collision, and many times has a lower policy deductible.

Do I really need Comprehensive Insurance?

Some vehicles may need comprehensive coverage more than others. For example, if your vehicle is in storage, it might be a good idea to have a comprehensive policy on the vehicle. This will protect the stored vehicle against damage such as rodents chewing the wiring or from weather damage if the garage is caught in a flood or tornado. Most people carry comprehensive coverage on collector cars for this same reason.

It’s also a good idea to maintain comprehensive coverage on your vehicle if it’s at a high risk of being stolen. Certain areas are especially prone to auto theft, such as cities with high drug-related crime rates or those near the Mexico border. If you live in an urban area, protection against theft is a valuable reason to carry comprehensive insurance.

Other drivers choose to carry comprehensive coverage only during part of the year, such as hurricane or tornado season. This protects the vehicle from weather-related damage during the time that the risk is highest, without the full annual expense. If you decide to go this route, make sure to remember to add the coverage back in time for the season’s change; you can only be paid for damage if the coverage was already listed on the policy at the time the damage occurred.

If your vehicle is very old, it may not be worthwhile to carry full coverage insurance since any damage might cause the car to be a total loss. For vehicles under 10 years of age, however, comprehensive coverage is often worth the money. Because comprehensive coverage is so affordable, it won’t make much difference to your policy to add it even if you cannot afford collision coverage.