How Does Collision Coverage Work?
Collision coverage is one of the types of auto insurance which pays for the cost of repairing your car in case it gets damaged from hitting a fence, a tree or something else. Even if the collision is your own fault, the collision coverage will pay the money needed to repair your car. Collision coverage covers only damages to your personal car but doesn’t cover someone else’s car if you hit it, but your property damage coverage will.
Ways Which Collision Coverage Works
1. It pays to repair damages on your vehicle if you cause an accident.
If you accidentally wreck your personal car, your insurance company will pay the costs required to repair it. In case the cost of repairing is higher than the vehicle’s market value, they’ll pay for a new one based on the vehicle’s market value at that time.
2. It pays for damages to your car when a different driver causes the accident.
Your insurance company pays for your car’s damages then goes to seek compensation from that driver’s insurance company. Most drivers usually take advantage of the situation when the insurer of the driver at fault is slow to act or is difficult.
You’ll demand your insurer to take an action in this situation, but you’ll enjoy these benefits if you already paid for collision insurance. Your rates will not increase from using this option since you weren’t at fault. Before you choose your course of action, ask the insurance adjuster if an incident will or will not affect your rates.
3. It pays for damages to your car in scenarios not covered by the other parts of your policy.
If you haven’t purchased the comprehensive coverage for acts of nature, damage, and theft among others, you can basically claim for such kinds of losses under the collision coverage. For damages caused by a non-insured driver or for hit and run accidents, you may claim the losses under the collision coverage.
In these scenarios, using collision coverage may increase your rates since your insurer can assess the damages as though you caused them yourself or you were at fault. It is therefore advisable to carry underinsured motorist or comprehensive cover to pay for damages in any scenarios.
Collision coverage is worth thinking about. It gives peace of mind since you will be covered whether the accident was your fault or not. Collision coverage is very important if you have a new car or if your car would be expensive to repair. For less expensive or for old cars, it doesn’t make much sense to have this coverage since the cost can exceed your car’s worth.
Including collision insurance to your auto policy increases your monthly premium costs. The increment depends on the driver’s driving habits, geographical location, driving history, the type of vehicle driven, credit score, income, education level, gender, and age.
When deciding to pay or not to pay for collision coverage, consider the value of your car, the depreciation value of your car over time, and your risk of getting an accident. It is important to note that having no collision coverage may leave you with huge expenses if you wreck your car.