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Physical Damage Coverage (Comp & Collision)

1. How Does the Insurance Company Decide to Total My Car?
Collision coverage, comprehensive, and other parts of your insurance policy will pay for accident-related repairs to your car where applicable. When the damages are too great, the insurance company "totals" the car, paying the market value of the vehicle rather than paying for repairs. If collision and comprehensive auto insurance claims exceed the market value of the car, the vehicle will be totaled.

Insurance companies use a formula to decide if they should total the vehicle, and the formula is not standardized. Your insurance company may decide to total the car if it is damaged over 80% of its market value, but some companies will use a lower percentage. Don't forget that your deductibles still apply even if the car is totaled.

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2. What Is "Other Than Collision" Coverage?
"Other Than Collision" or OTC is the same as comprehensive coverage. OTC is just the name some insurance companies give comprehensive protection. Comprehensive coverage claims include weather damage, falling trees, vandalism and animals. Like other parts of your insurance policy, comprehensive coverage requires you to set a deductible and pay it before your insurance begins paying your claim.

Comprehensive coverage may be mandatory if you are paying a loan on your vehicle, but this coverage may be optional in other situations and may not be necessary if your vehicle is very old. If you keep your vehicle in storage or a parking garage and seldom drive it you may still want to keep this physical damage coverage on your car. Your OTC coverage includes protection from theft and vandalism -- an important factor to consider especially if you live in high-risk areas. Even with the added protection of covered parking, your vehicle may not be completely safe from loss or damage. If you keep your comprehensive coverage for this reason, you may want to consider choosing a lower deductible. Stolen cars usually turn up sooner or later but are often damaged.

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