Collision Coverage in Auto Insurance Policy

What is Auto Collision Coverage?

Collision coverage offers compensation for the damages that happens to your car during an accident. It does not provide coverage against the third party's car. The amount of coverage provided by the collision insurance depends on the face value of your car. If your car has a high face value, the cost of the premium will be expensive. This is because the replacement parts and repair fees for a high profile car is costly. If your car worth a little value in the market, you will be charged with lower premium fee. The compensation amount that is disbursed by the insurance company depends on what damages the vehicle underwent during the accident. The insurance company will only pay for up to the face value before the accident took place. The salvage value of the vehicle will be deducted from the insurance policy.

How Much Protection Does This Coverage Provide?

Most insurers will require you to pay a deductible. The range of deductibles is in between $1 - $1000. The more deductible you pay, the lower the premium cost will be. If you pay a low deductible, your premium fee will increase. In many states, collision coverage is not necessary. However, many jurisdictions have made it a requirement for the drivers. If your state requires collision coverage, make sure you check the website to determine the minimum requirement. If you are caught without the collision coverage, your driving license will be suspended. Normally, car rental companies require the renter to purchase the collision coverage. You will be able to choose to purchase from an insurance company suggested by the rental company. People who purchase the cars on bank loans also need to show that they have collision coverage. The reason financial institution requires people to get collision coverage for the loaned vehicle is to protect it from the damage cost. In case the vehicle gets damaged and the borrower drops the loan, the financial institution doesn't have to pay for the damage costs because they are covered by the insurer.

Do You Need Collision Coverage?

Yes. Collision coverage is necessary even though you can sue the third party who is at fault. The third party may disagree with you that he is at fault. Both of you will enter into a legal proceeding and the judge will decide the case. If the judge rule that you are at fault, you will be liable for paying the damages of your own case. Besides, there is a possibility that the third party does not have liability insurance. As a result, suing the third party will not help you to get any compensation for your car damage. With collision coverage, you don't have to pay for your car damage cost. The insurance company will pay for the replacement parts and repair fee. Some insurance company offers a complement car for the policy holders while their cars are being repaired at the garage.

When shopping for collision insurance, make sure you perform thorough research so that you can benefit from the low premium cost. You should talk with your insurance agent because he is skilled at finding good insurer that will benefit you in the long term.