When it comes to auto insurance, this is probably the biggest area of confusion. Many people, it seems, don’t understand what they’re buying.
A recent survey by InsuranceQuotes found that 68 percent of Americans incorrectly believe the comprehensive part of their policy covers damage to their car from a collision.
According to the Insurance Information Institute:
Comprehensive: Provides protection against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees, or hitting a deer.
Collision: Reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other object (such as a tree or guardrail) when you’re at fault. It also covers damage from potholes or from rolling your car.
Both comprehensive and collision coverage are optional insurance that protects your car. Liability insurance is legally required because it covers the costs associated with injuries, death, or damage caused to another vehicle or property that you or another driver causes while driving your car.