Collision auto insurance coverage is for most auto crashes. Whether your car runs into a car or a guardrail, you can rely on this insurance to provide you with the protection you need. Therefore, you can use this insurance protection for the following incidents:
- Your car is hit when you are parked.
- You drive into a stationary structure, such as a pole, streetlight, or a tree.
- You crash into a deep pothole or a ditch.
- You are involved in a crash where your car flips over.
- Your car is involved in a hit-and-run accident where you cannot use an uninsured motorist plan.
A No-fault Type of Coverage
This insurance permits you to file a claim, regardless of who is at fault. As a result, this claim can be processed in a quicker amount of time. The claims adjuster does not need to assess the party at-fault. People like this type of coverage, as they only have to transact business with their insurance company. That means, you have an easier time receiving payment. A collision insurance policy can also be used to cover a rental car, which spares you from having to purchase rental car coverage.
Collision insurance, as the name suggests, will not cover your car in instances where the damage was not related to driving. Therefore, you cannot use this type of policy to cover the following:
- Damage caused by theft or a natural event, such as hail.
- Damage to another person’s auto.
- Medical expenses (yours or another driver’s or a passenger’s).
Determining the Deductible
Collision insurance features a deductible amount, which is the amount paid before the coverage pays for the remainder of the claim. For example, if you select a $500 deductible, you will owe $500 before the collision insurance kicks in. The collision insurance would pay for the rest.
Collision insurance features a limit, or a maximum amount that is paid to cover a claim. This limit normally covers the actual cash value of a vehicle. For instance, suppose your car is totaled in an auto collision. The insurance provider would give you an amount that covers the depreciated value of the car minus the deductible. The depreciated value is the current value of your car. Therefore, you usually cannot replace the older car with a newer model car. You would have to pay for some of the expense yourself.
When Collision Coverage Is Mandatory
If you are currently leasing your car or financing it, a lender or lease company will require that you apply for collision coverage. If you have paid off your car and own it, you can forego the coverage. To make a decision for this type of insurance plan, you need to ask the following: How much will it cost me to replace and repair by vehicle if it is damaged or totaled in an accident. If you know that it would be difficult to repair or purchase a new car after a crash, you should buy this type of coverage.
This type of insurance is the most important insurance to have if you want to protect your car from physical damages. Somebody is always at fault in an accident. Sometimes that person is you. While most people choose a $500 deductible, you will pay a lower monthly premium if you opt for a $1,000 deductible. Think about how much out-of-pocket costs you can afford when making this decision.
Also, keep the following in mind –
- Collision insurance can only be bought when it is combined with comprehensive insurance and liability coverage.
- The insurance coverage helps in places where it gets slick and icy, as it will cover you if you slide off the road and end up in a ditch or hit a pole.
- Collision insurance will cover damages from potholes.
When you review the coverage, you will find that this type of insurance can be quite helpful, especially if you are driving a newer model and make of car.
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