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Collision Insurance Coverage
It is a notorious fact that most car accidents happen due to collisions. This is in itself an adequate cause why you should consider purchasing Collision Insurance, a type of Auto Insurance that covers the damages of the car resulting from a collision with another car or object. Collision coverage reimburses you for the repairs or replacement costs of your car after an accident.
Besides statistics prompting to buy Collision as obvious precautionary measures, there are a number of other valid reasons why it is wise to purchase Collision Insurance. For instance, if you have a brand new car, Collision Auto Insurance makes a necessary investment.
If you are financing a car, carrying Collision and Comprehensive coverage is a requirement. The lender or dealership will require you to have Collision Insurance since they do not want to put their investment at risk and need to be sure that you will have enough money to pay off the loan or replace the wrecked car in case of an accident. Mind that if you are required to have Collision Auto Insurance by a lender, you should also consider carrying the Gap Insurance. Having both Collision and Gap Insurance you can expect getting reimbursed for the difference of the amount your car is worth and the amount on your car you still owe.
Then, when you are on the road, there is always a danger that you might cause an accident, even if you are one of the safest drivers and have a clean driving record. Collision coverage will pay for the damage even if you are at fault.
Finding faults may often become a complicated matter though. It is a commonly occurring situation when you may claim that an accident was the other party's fault, while the other party may insist there was more of your fault. If you have Collision coverage, your insurance company will often repair the car as well as take over your claim against the other driver. Collision may also pay in the situation when the other driver is at fault but has no liability insurance. If you hit a tree or a telephone pole and there is no one to sue, Collision coverage may help you out as well.
Basically, the term "Collision Insurance" can mean just basic repair coverage, or it may be comprehensive coverage that takes care of your and the other driver's health in case of an accident. Read your policy carefully to be perfectly aware of what is covered and what is excluded and whether to expect lower bills if you happen to get in an accident.
There are two types of Collision Coverage depending on the insurance options they provide. You can either get a replacement-cost coverage, or the actual cash value coverage. In the first case, you will be given enough money to buy a car of the same make, model, and year of your totaled vehicle. The wear and tear of your car is usually not taken into consideration here. You should expect an extra premium for this coverage type, however the expenses are worthwhile.
With the actual cash value coverage you will be given a check for the actual value of your car at the moment of the crash. As you may understand, it can be not the same amount you will need to replace the wrecked car. Your car may have high mileage and be not in an excellent condition, and the loan on your car can be higher at the time of the accident than your vehicle's actual cost.
Most of the US states classify Collision Auto Insurances as Limited, Standard and Broad Forms.
Limited Form Collision pays for damage caused to your car, minus your deductible, if the other driver is at fault. Standard (Basic) Form Collision pays for the repairs of your damaged car, no matter who is at fault, minus your deductible. With Broad Form Collision you get reimbursed for damage to your car and you do not pay your deductible if the other driver is at fault. Broad Form is consequently the most expensive Collision coverage type. Some insurance companies will also extend their Collision coverage to rental cars as well.
The amount of Collision coverage on your policy and its cost will depend on your car and its value. Expensive or insecure cars or vehicles from frequently stolen top list will get higher premiums. The damage and car characteristics will determine the amount you will be paid for an accident. You can reduce the cost of Collision Auto Insurance coverage if you agree to take a higher deductible.
If you are involved in an accident and it is not your fault, your auto insurance company will try to reclaim costs from the at fault driver's Auto Insurance. If they succeed in recovering their full costs they will refund you the deductible amount and there may be no change in your premium. However, if the accident is your fault, your insurance premiums are likely to increase by 20 percent, depending on the extent of the damage and injuries. While one collision claim and a minor accident can be forgiven, a serious accident with injuries or multiple claims will surely mean cancellation of your Car Insurance.
If your Car Insurance policy is cancelled due to a Collision claim, you may opt to file an appeal through the Insurance Department. Since policyholders who are frequently involved in accidents are largely disfavored, fighting for the recovery of your rights may take quite a long time and much effort.