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The Collision Component of Auto Insurance Coverage and Some Recomendations

Collision car insurance protects the insured if they are in an accident with another motor vehicle (or another object) in that it covers the cost of repairing the insured’s vehicle.  It is paid to the insured regardless of whether the accident was their fault.  This insurance is almost always a requirement if there is a loan on the car because if the automobile lets say is totaled  it protects the creditor.  It does so because the insurance payment to the policy holder is ideally enough to pay off the loan.  Now if the car is worth less than the loan then the insured has to pay the difference unless they have a gap rider (which is recommended).  If there is no loan on the car collision insurance  is not a requirement though the insured may regret not having it if the car has a least some value and  is badly damaged in a accident especially if it was their fault.

An important aspect of collision insurance is the deductible which is how much the policy holder has to pay out of pocket when the insurance company goes to make payment to repair the vehicle.   It would be better for a driver that does not have a lot of spare cash  to choose a lower deductible.  This is another reason why its important to review one’s auto policy at least once a year.   Another variable in the cost of collision insurance coverage is how much the automobile is worth as a more expensive vehicle will cost more to cover.

On a final note when a claims adjuster makes an offer to make a payment to repair or replace the vehicle that was damaged it certainly does not have to be accepted (especially the first time).  Check out my auto insurance claims tips here.  Sometimes you have to play hard ball with an insurance company if they aren’t being fair.