Optional Automobile Insurance

Even though some types of automobile insurance aren't required by law, you may still want coverage to protect your vehicle. Comprehensive and collision insurance policies do just that.

This page:

Describes collision and comprehensive auto insurance policies

Explains insurance deductibles and how they work

Lists other automobile insurance policy extras

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Collision Insurance

Collision insurance coverage pays for damage caused to your vehicle in an automobile accident, when you are "at fault". A standard collision automobile insurance policy will pay for any repairs up to the fair market value of your car.

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It is important to remember that this value can be significantly lower than the cost of replacing your vehicle (or your loan balance.) If your car is financed or leased, you will need gap insurance to reimburse you for the difference between what you owe and what the car is worth.

Collision coverage usually also comes with an insurance deductible. It's the amount of money you pay toward repairs before your collision insurance kicks in. The higher the deductible you're willing to pay, the less the collision policy will cost.

Collision insurance coverage is not required by law in any state. However, if you're driving a car purchased from a dealership or financed through a lender, you may be required by the dealership or lender to carry collision insurance. (And just to be sure, you should get gap insurance.)

Comprehensive Automobile Insurance

Comprehensive is very similar to collision insurance, the main difference being that comprehensive covers damage caused to your vehicle caused by any unknown party or "act of God".

Vandalism, flood, hurricane, theft, and fire are all events usually covered by comprehensive automobile insurance. (But make sure to read your comprehensive insurance policy for exact coverage details.)

Like collision automobile insurance, comprehensive coverage will pay up to the fair market value of your car (less your insurance deductible.) And although it's not legally required by any state, you will probably need it if your car is financed.

Hot tip: Your collision and comprehensive automobile insurance policies are two places where it can be pretty easy to cut costs. Read our guide to choosing car insurance for money saving strategies!


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Automobile Insurance Endorsements

Automobile insurance endorsement is just a fancy term for any of those policy extras like towing insurance, auto glass insurance, daily rental insurance, and emergency roadside insurance.

These policies are never required by any state, but many drivers value the security and convenience they provide.

Here's what you get for your money:

auto towing insurance pays for (you guessed it) towing your car anytime you need it

auto glass insurance gives you a lower deductible (or no deductible) when it comes to repairing any broken window on your car.

daily rental insurance covers the cost of a rental car while your car is being repaired because of a covered event. (So you'll usually need both comprehensive and collision insurance to qualify.)

emergency roadside assistance covers repairs done on the spot. Changing a flat roadside may be covered, but you'll have to pay for any repairs at the garage. This policy is often combined with auto towing coverage, and called roadside emergency towing insurance.

In some states, medical payments coverage and uninsured/ underinsured motorists coverages are voluntary coverages. In others, they're mandatory. Find your state requirements here.


Next: Understanding the auto insurance policy document.

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