What is Collision Insurance?
Collision insurance is a type of automotive insurance that covers damage to your vehicle in accidents when you are found to be at fault. It is a separate purchase in addition to state mandated liability insurance. It is also a separate purchase from gap insurance and comprehensive insurance as well. It is standard for collision insurance to have a deductible. By increasing the deductible it is possible to get a lower monthly payment however, this will be your out of pocket cost in an accident before insurance pays. Collision insurance will cover up to the value of your car minus your deductible. This may not be what you owe on a loan or what it will cost to get a new car.
How does collision insurance work?
Collision insurance is insurance purchased in addition to liability coverage. When you are found to be at fault in an accident, your collision insurance will pay for the repair or replacement of your car. The amount paid will be your market value of the car (when the car is totaled) or cost of repairs minus your deductible. It is always wise to make sure you can afford your insurance deductible so an accident does not leave you in financial stress.
What does collision insurance cover?
Collision insurance covers damages to your vehicle in accidents deemed to be your fault. It does not cover damages to other vehicles or property, that is covered by liability insurance. “Acts of God” and vandalism are not covered under collision insurance either. If you are in a no fault or 50/50 accident again your vehicle repairs will be covered under collision insurance. Under most policies, collision insurance will also cover towing as well as the cost of repairs or replacement after the deductible. Double check with your insurance provider to determine the exact details of your policy. In the event that your uninsured motorist protection does not cover damages to your car, collision will. Damages to your vehicle in accidents involving no other people are also covered under collision insurance. These types of damages would be from hitting a tree, telephone pole or other physical object.
Ultimately the decision to purchase collision insurance will be your own, talk with your insurance company to determine what fits your needs.
