Collision insurance and comprehensive insurance cover the cost of car repairs or replacement of a policy holder’s vehicle. Collision insurance pays for damage caused by a car accident involving another vehicle, person or object. Comprehensive insurance covers damage caused by something other than a collision.
Collision and comprehensive coverage are often bundled as a package in California. But they are two separate forms of first-pary insurance.
Unlike property damage liability insurance (which covers damage to other people’s property) collision and comprehensive insurance are optional in California. However, lenders may require the purchase of collision and comprehensive policies before they will finance the purchase or lease of a new vehicle.
The cost of collision and comprehensive insurance in California depends primarily on two factors:
- The policy limits (usually the current market value of the vehicle), and
- The amount of the deductible selected by the purchaser (the higher the deductible, the lower the cost of the insurance).
To help you better understand comprehensive and collision insurance, our California personal liability lawyers discuss the following, below:
- 1. What is collision insurance?
- 2. What is comprehensive insurance?
- 3. What does physical damage insurance cover?
- 4. How do collision and comprehensive coverage differ from liability insurance?
- 5. Do I have to carry collision and comprehensive coverage in California?
- 6. How much do collision and comprehensive insurance cost in California?
- 7. Can a body shop legally waive my deductible in California?
- 8. What if my car is totaled?
- 9. Do I have the right to keep a totaled vehicle?
- 10. What if I disagree with the insurer’s decision to repair or total my car?
- 11. Will my premium go up if I make a claim for property damage to my vehicle?
- 12. What if a claim is only partially my fault?
Collision insurance is a type of physical damage insurance for motor vehicles. It pays to repair or replace a policy holder’s car, truck, van or motorcycle after it collides with:
- Another vehicle,
- A pedestrian, or
- Any other property (such as a fence, gate or garbage can).
Comprehensive insurance is another type of physical damage vehicle insurance. It pays to repair or replace the policy holder’s vehicle after it is damaged by something other than a collision, such as:
- Falling trees or branches,
- Vandalism (such as keying or stolen tires), or
- Other covered events not caused by the policyholder.
Collision and comprehensive insurance pay for the lesser of:
- The cost to repair the vehicle to its current condition, or
- The cost to replace the vehicle if repairs exceed a certain percentage of the vehicle’s value (that is, the vehicle is a “total loss.”).
The insurance company will not pay in excess of the policy limit. As the policy limit is usually the current market value of the vehicle, this is seldom an issue.
Liability insurance covers damage to other people and their property when a liability policyholder is at fault for an accident. It does not pay for damages to the car driven by an at-fault driver or for damage to a vehicle caused by so-called “acts of God” or acts such as theft or vandalism.
If you are at fault for an accident your liability insurance will cover damages to the other driver’s car. Your own insurance will only pay your car repair bills if you elected to purchase (and paid for) collision coverage.
If the other driver is at fault his or her liability insurance will pay your car repair bills. If the other driver does not have liability insurance, you can look to your collision insurance.
Collision and comprehensive coverage are generally optional in California.
An exception is a vehicle that is financed. Lenders will usually require that the purchaser or lessee carry collision coverage during the term of the loan or lease.
Otherwise, the decision whether to purchase collision and/or comprehensive coverage is personal.
If a vehicle is not worth very much, it may not be worth the cost.
It all depends on what a driver can afford and the risk of a covered event that would require the vehicle to need repairs or replacement.
Although commonly sold as a package, collision and comprehensive insurance may be purchased individually. The cost for each depends on the current market value of the covered vehicle and the deductible elected by the policyholder.
The deductible is the amount the driver has to pay out of pocket before the insurance will pay any money toward a covered claim. The higher the deductible chosen the lower the cost of the insurance will be.
Common deductible levels for collision insurance in California are $100, $200 or $500. Common deductible levels for comprehensive insurance are $200, $500 or $1,000.
Example: During a violent windstorm, a branch falls off a tree and damages Veronica’s car. The auto body shop estimates $5,000 to repair the damage. Veronica has comprehensive coverage with a $500 deductible. Her insurer will pay $4,500, either directly to the auto body shop or to Veronica.
Sometimes a body shop will agree to waive the customer’s deductible. This is usually legal as long as the repair shop’s estimate was not inflated for that purpose.
Sometimes the cost of repairing a vehicle is more than its value. In such a case the car will be considered a “total loss” vehicle.
There is no set formula for when a vehicle is a total loss in California. Every insurer has its own policy.
In general, a vehicle is considered a total loss if the cost to repair the vehicle is more than about 3/4 of the car’s actual cash value plus its salvage value. The salvage value is the amount the car is worth in its damaged state. This is usually the value of the scrap metal or, in some cases, the resale value of desirable, undamaged parts.
An approximate formula for when a car is considered totaled is:
Cost to repair ≥ .75 X (car’s actual cash value + salvage value)
Example: Bill falls asleep at the wheel one night and crashes his 2010 Lexus 350 into a highway divider. The car’s actual cash value is $15,000. Its salvage value is $2,000. Bill’s car is, therefore, a total loss of if the cost to repair it equals or exceeds about $12,750 (.75 X $17,000).
Yes. But the salvage value will be deducted from the settlement. In essence, the policyholder is “buying back” the vehicle for the salvage value.
The purchaser is then responsible for re-registering the salvaged vehicle with the California Department of Motor Vehicles.
There may be costs associated with obtaining a salvage certificate or registering the repaired vehicle for use. See the above link for details.
Sometime a vehicle owner would prefer to have a car declared a total loss when the insurer wants to repair it. This most frequently happens when the car has sustained frame damage and the owner is concerned about being to sell the vehicle later, even if it is repaired.
Or conversely, a policyholder may want to keep a vehicle for sentimental reasons even though insurance considers it a total loss.
Unless the car is financed, the policyholder has the right to keep the car and have the insurer pay the lesser of:
- The car’s cash value (before the damage) less salvage value, or
- The insurer’s estimate of the cost to repair the vehicle.
The policyholder can then do whatever he or she wants with the vehicle.
Of course the challenge is getting the insurer to agree with the policy holder’s valuation of the vehicle.
An experienced California car accident lawyer can often help convince the adjuster the car is worth more or that it should pay for a total loss rather than repairs, or vice versa.
The short answer is – it depends. Frequency and severity of claims are just two factors among many that determine the rates people pay for auto insurance.
One claim for bumper damage from a deer running in front of your car may not affect your rates. But more than one claim in several years might affect a policy holder’s premium.
California’s “shared fault” law makes it possible to apportion liability for an accident among more than one party.
A driver who was only partially to blame for an accident may be able to recover some of his or her damages from another driver. The driver’s own collision policy may then make up the difference.
The same may be true for comprehensive coverage. For instance, if a branch from a tree on someone else’s property falls onto someone’s car, the other property owner might be legally liable in whole or in part under California premises liability laws.
Need help getting car repairs paid after an accident in California? Call us…
Call us to speak to a lawyer about your case.
Or for more information, read the California DMV’s Automobile Insurance Information Guide.
We may also be able to help if you need repairs after an accident in Nevada.