Common Car Insurance Questions

Published: May 2013

When shopping for car insurance. one of the keys to ensuring that you choose the right policy for your needs is making sure you understand some key concepts.

Not sure where to begin? Below is a list of some common car insurance-related questions.

What is the difference between collision coverage and comprehensive coverage?

It's easy to remember what collision coverage does, simply by looking at the word "collision." When you have this type of coverage, you're essentially insuring your car against damages it may suffer if your car collides with another vehicle. Comprehensive coverage. on the other hand, deals with loss or damage caused by things other than a collision such as theft, vandalism, animals or hail.

How do deductibles work?

A deductible is a specific amount of money you pay out of pocket before your insurance company will begin to pay for a covered loss up to the limit. For example, if you have a $500 deductible and your car suffers $2,000 worth of damage, your insurance will pay $1,500 after you pay your $500 share. You can choose your deductible amount. This means that if your car experienced the same $2,000 damage and your deductible was set higher than $2,000, you'd pay the full amount out of pocket.

The reason many people opt for higher-deductible insurance policies is to lower premiums. While that is always helpful, consider what works best for your situation.