What is collision coverage on your auto insurance policy?
Collision coverage can help pay for damage to your vehicle that is damaged in an accident due to a collision. What does collision coverage cover on your auto insurance policy? Collision coverage can help pay for things like running into another vehicle, running into a telephone pole running into another building. Basically any time your car is moving and colliding with other objects and causing damage to your vehicle.
What does collision coverage not cover?
Collision coverage will not cover damage to your vehicle caused by fire, theft or weather. That’s what comprehensive is for and that’s the other part of the “full coverage” equation. Both collision and comprehensive make up what people refer to as full coverage.
Do you need collision coverage on your auto insurance policy?
This depends entirely on the vehicle you drive and your financial situation. If you have a loan on your vehicle, you need collision coverage. If you have a newer and or expensive vehicle, you need collision coverage. If you don’t have the financial means to repair or replace your vehicle should something happen to it, you need collision coverage.
How much collision coverage do you need?
There are no limit or coverage options when it comes to collision coverage, you either have it or you don’t. The amount paid out depends entirely on the value of your vehicle should there be a total loss or the value of the damage that was done to your vehicle.
The one coverage option that you can select is your deductible. Deductible limits usually come in increments, starting at $250, going up to $500, and sometimes even up to $1,500 or $2,000. The deductible comes into play when your vehicle is damaged or when it’s a total loss.
Let’s say for example your vehicle is damaged due to a collision and there’s $10,000 worth of damage. Let’s say you’ve selected a $1,000 deductible. The insurance company is going to pay for the $10,000 worth of damage minus your $1000 deductible. So you are going to get a check from the insurance company for $9000, and you, out of your own pocket will be responsible for that $1000 deductible.
So as you can see, the higher the deductible, the lower your insurance premium is going to be. The lower the deductible, the higher your insurance premium is going to be because that means there will be less out of your pocket if you have a lower deductible and more out of the insurance company’s pocket should you have an accident and you have a lower deductible.
How much does collision coverage cost on your auto insurance policy?
Like most things with insurance, that depends entirely on a number of different factors which are unique to your specific situation. Things like how old the vehicle is, how much the vehicle is worth, your driving record, how many drivers are on your policy, the age of those drivers, all of those things go into creating the premium amount for your collision coverage.
Like all things, you should speak with an independent insurance broker. They can take your unique situation into account and craft a policy that is the best priced policy, but also the policy with the best coverage again for your unique situation.