Collision Car Insurance
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What is Collision Car Insurance?
Collision car insurance is a type of car insurance that helps you out if your car gets into a crash or hits something, like another car or a pole. It’s different from other types of insurance because it helps pay for your car repairs even if the accident is your fault.
Now, let’s break it down a bit more. Collision insurance comes into play in various situations:
- If your car has an accident all by itself, like tipping over.
- If your car hits something else, like a pole or a sidewalk.
- If your car is involved in a traffic crash or gets hit while parked on the street.
It’s important to know that collision insurance only covers the cost of fixing your car. It doesn’t pay for damage to other cars or things, and it doesn’t cover any injuries you might get in the accident. So, in a nutshell, collision insurance is there to help you get your car back on the road after a mishap.
Understanding Collision Coverage Deductibles and Limits
When it comes to collision coverage for your car, there are two important things to know: deductibles and limits.
First off, a deductible is the amount you have to pay before your insurance helps cover the costs of a claim. It’s like a participation fee. When you get collision coverage, you get to pick your deductible amount. It usually comes in options like $0, $500, or $1,000. Here’s the deal: if you go for a lower deductible, your monthly payment might go up. But if you choose a higher deductible, your monthly payment could go down. But, and this is important, if you ever need to use your coverage, you’ve got to pay that deductible towards fixing your car. Let’s say you picked a $1,000 deductible and your car gets in a covered accident. You’d have to fork out $1,000 for the repairs. Deductibles are usually between $250 and $1,000, and remember, the value of your car matters when deciding how much deductible to go for.
Now, let’s talk about limits. This is the maximum amount your insurance will pay for a covered claim. For collision coverage, this limit is usually the current value of your car, accounting for depreciation (which is the decrease in value over time).
Here’s an example: If your car gets totaled in a covered collision. Your insurance will cut you a check, but it’s not the full price of your car. They’ll subtract the deductible you choose, and you’ll get the depreciated value. That means the value of your car considering it’s not brand new anymore. So, if you were thinking of replacing your old ride with a shiny new one, you might need to pitch in some of your own money. Just something to keep in mind when you’re figuring out your coverage.
What Does Collision Insurance Cover?
Collision insurance helps you when your car bumps into something. This includes situations where your vehicle hits:
- Another car (whether it’s parked or moving)
- Telephone poles
- Guardrails
- Fences
- Signs
- Trees and bushes
- Houses and other buildings
Depending on your insurance plan and where you live, collision insurance might also pay for fixing your car if it flips, if you’re in a hit-and-run, or even if you accidentally drive into a pothole.
If you already have collision insurance or are thinking about getting it, it’s a good idea to talk to an agent. They can help you understand what the insurance does and doesn’t cover.
Understanding How Collision Insurance Works
If you accidentally hit a curb in a parking lot, causing damage to your car’s front suspension and other important parts. Let’s break down how collision insurance steps in to help:
- Report the Damage: First things first, you need to document the damage and get in touch with your insurance company. They’ll guide you through the process.
- File a Claim: After assessing the damage, you find out that you can get reimbursed for the repairs by filing a claim. This means your insurance will help cover the costs.
- Deductible Decision: You have a deductible of $1,000. Since the repair cost is clearly more than that, you decide it makes sense to file a claim.
- Towing Assistance: If you have roadside assistance as an additional service (it’s usually not too pricey), your insurance will even pay for towing your car to their recommended repair shop. While you have the choice to pick your own mechanic, going with the insurance company’s suggested garage has its perks – they guarantee the repairs for as long as you own the car, and your insurer can directly pay the garage.
- Insurance Adjuster’s Role: An insurance adjuster is sent by your insurance company to inspect your car and estimate the initial repair costs. In this case, the estimate is $4,100.
- Accepting the Estimate: You decide to accept the estimate, moving the process forward.
- Rental Reimbursement: If you’ve added rental reimbursement coverage to your policy (usually available after getting comprehensive and collision insurance), your insurer covers the expenses for a rental car while yours is in the shop.
- Car Ready for Pickup: Once your car is fixed and ready for pickup, you’re notified. But before you can drive it home, you need to pay the auto repair shop $1,000, covering your deductible.
Understanding these steps can make dealing with collision insurance a bit easier if you find yourself in a similar situation.
Do I need collision insurance coverage?
You might be saying, “I’m a responsible driver, do I really need this?” Even though it’s not a must according to state rules, having collision insurance is a wise choice. Picture this: there’s so much happening on the road that’s beyond your control. Do you want to risk shelling out thousands of dollars from your own pocket to fix your car after an accident?
Collision coverage is like a safety net for your investment, especially when you also have liability and comprehensive coverages. If you’re leasing your car or still making payments, your finance company might ask you to get both collision and comprehensive coverages. It’s a good idea to check with them to be sure. This is crucial for new drivers, like teens, who are just starting out on the road and may not have as much experience. It’s all about making sure you’re covered when unexpected things happen.
How much does collision insurance cost?
The price of collision insurance can vary depending on the insurance company. Sometimes, you may need to get both collision and comprehensive coverage together. This could happen if you’re still paying off a loan or lease, or if the insurance company requires you to have one to get the other.
AtoZ insurances, a source that looks at national car insurance rates, found that, on average, full coverage insurance costs about $2,148 per year. Keep in mind, though, that your own costs might be different. This is because insurance companies consider various factors when setting rates, such as the type of car you have, how much you drive, and where you live.
Is Collision Coverage a Good Idea?
Just like other types of car insurance, whether collision coverage is right for you depends on your situation. Some drivers, especially those who rent or lease their cars, might need to get this type of insurance. If that’s the case for you, then it’s probably a good idea to have collision coverage.
But it’s not just about financing. If you cause an accident, your liability coverage helps pay for the other person’s car repairs, but it won’t cover yours. That’s where collision coverage comes in handy. Also, if you own a new or expensive car and the repair costs are more than what the collision coverage would cost, it might be a good move to get a policy.
it’s wise to think about your budget, how much you pay for insurance, and the value of your car to figure out if collision insurance is a good fit for you. Check if the deductible (the amount you pay before insurance kicks in) fits your budget and if it’s less than what it might cost if you get in an accident.
Here’s a quick rundown:
Pros:
- Works whether the accident is your fault or not.
- Helps you with repair costs, so you don’t have to pay as much.
- Gives you some extra peace of mind.
Cons:
- Doesn’t cover your medical bills.
- Doesn’t pay for damages to the other person’s car.
- Your insurance costs might go up.
FAQs
You might want to drop collision insurance if the total cost of the coverage, including your collision deductible, is higher than what your car is currently worth. Also, if your car’s value is equal to or less than your deductible, it might not make sense to keep the coverage since it won’t pay out much, if at all, in the event of a claim.
Probably not. Collision insurance pays up to the current market value of your car, minus your deductible. Since older cars often have a lower market value, having collision coverage may not provide much financial benefit in the case of a total loss. Before deciding to drop the coverage, it’s a good idea to research your car’s current worth.
No, collision coverage is not legally required by any state. However, if you’re leasing or financing your car, your lender may insist on it. Even if you fully own your vehicle, getting collision coverage could be worthwhile, especially if you drive an expensive car or would struggle to cover repair costs after a significant accident. It can offer some peace of mind in such situations.
Collision insurance specifically covers damages to your own car in a traffic-related accident. On the other hand, “full coverage” doesn’t have an official definition, but it typically includes collision insurance, comprehensive insurance, and other coverage types required by the state. This broader insurance ensures protection for you and others in a variety of situations beyond just collisions.
About the Author
Alex Huber is a content writer for Atoz Insurances and he is a very experienced and well-rounded freelance content writer who specializes in the insurance and finance niches. His writing is engaging and informative, and he has a strong understanding of the industries he writes about.