What Is Collision Insurance?
Collision coverage is designed to cover you in the event of damage to your car in any one of a number of different situations. If you hit another car, you would be able to have your car fixed under this type of insurance coverage. This type of coverage also protects you for a hit-and-run accident.
Less your chosen deductible, collision coverage covers all costs. It is an optional service, but most people would never drive without it. If you lease or finance, your bank or dealership will actually require you to buy collision coverage to properly cover their investment.
What Kind of Deductible Should I Choose?
The collision deductible you choose is entirely up to you. The higher your deductible at the time of a collision, the lower the insurance fees you will pay along the way. However, if you get in an accident, you may run into serious problems if you can’t afford to pay the deductible.
Most people have a $500 deductible. But there are some who choose a $250 or $1000 deductible depending on their needs.
Your deductible should match the total amount that you would feel comfortable paying were you involved in an accident. You can generally choose what deductible you want and feel comfortable with, the standard being about $500.
However, if you are financing or leasing your vehicle, your bank may require that it be at or below a maximum deductible, which is usually the standard $500. Once you get out of that lease or loan though, it is again up to you what kind of deductible you feel comfortable with. At that time, you may prefer to purchase liability coverage only.
Collision Coverage Can Cover Repairs or Replacement Depending on the Severity
Depending on the severity of your car damage, collision coverage can cover the repairs and may even replace of your vehicle. Of course, this is only after your deductible.
On the other end, should your car damage go above 50% of your car’s total value, you can ask your insurance company to total your car even if they believe that the damage is not quite high enough. Your insurance company generally reviews all claims before the auto body shop starts their repairs. It is up to you to speak up if you feel that this is the case for you though.
Some people choose to do this based on possibly undetected damage that may appear later on causing the need for more repairs that may not be covered by your insurance company, especially in a wreck that would lead to that severe degree of damage.
Some Car Owners Also Choose Comprehensive Coverage?
As the name would suggest, collision insurance covers collisions between your car and just about anything else. However, it does not cover a tree branch falling on your car or other non-collision related incidents such as vandalism or theft. If you want coverage for repairs that are not directly related to a collision, you will have to sign up for comprehensive insurance as well.
If you are looking for the right insurance coverage for you, consider all of the hazards that your car may face and what you are most concerned about. Consider your financial situation and what you can and cannot afford to cover. This will help you to make the right decisions about your car insurance needs.