Auto collision insurance helps pay for replacing or repairing your vehicle when it’s damaged in an accident. This type of insurance covers the insured person and their vehicle. It’s different from liability insurance, which covers property damage to other vehicles. It’s also different from comprehensive auto insurance, which reimburses you for vehicle damage due to vandalism, theft or weather.
Who Has To Buy Collision Auto Insurance?
Unlike auto liability insurance, you don’t have to buy collision car insurance by law. However, if you have a car loan or rent your vehicle, the rental company or institution that holds your loan will likely require you to have it.
How Does Collision Insurance Work?
When you buy collision auto insurance, your insurer writes your policy terms. First, they determine a policy limit — which is a maximum amount the company will pay to repair damage to your car. Typically, $100,000 constitutes the most the company will pay. But you can usually raise or lower that amount. Remember that your deductible and premium will fluctuate based on your decisions.
The insurance company must declare a deductible for your collision coverage. A deductible is the amount you pay out of pocket before your car insurance kicks in. Normally the deductible starts at $500, but you can work with your agent to lower or raise that amount to suit your needs.
What’s The Function of Collision Car Insurance?
With collision car insurance, you receive compensation for property damage to your own vehicle. When you get into an accident, the insurance company will determine the damages and the estimated cost of repairs. They subtract your deductible amount from this estimate. You must pay that amount, while the insurance company pays the rest (up to the limit of your policy). Ask your agent whether the insurance option you choose writes you a check or pays the auto repair shop.
Things To Consider For Collision Car Insurance
Your coverage limit and deductible impact what you end up paying for collision auto insurance. Essentially, the premium goes up for those with higher coverage amounts and lower deductibles. Most people choose a lower limit and higher deductibles when they want a lower insurance payment.