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Explain What is Collision Insurance – Carinsuranceestimate

callision insurance
Many people are confused between the various types of auto insurance coverage and especially differentiating liability from collision insurance. To break it down so anyone can clearly understand the distinctions, just remember that collision coverage protects damage done to your vehicle, while liability insurance covers damage to another parties vehicle, as a result of an accident.

Collision insurance will cover you for an accident that you were in no matter who was at fault. It will also protect you as a result of a solo incident, such as sliding off the road and hitting a tree. In simple terms, collision insurance covers you for damage you inflict.

Difference between Collision and Comprehensive Insurance
The core difference between collision and comprehensive insurance is the scope of coverage. Collision insurance will cover you for damage done to your vehicle that you were responsible for such as rear ending another vehicle.

Collision coverage also can be broader in coverage, usually on a case by case basis depending on the accident that caused damage to your car and the flexibility of your insurer.

Comprehensive insurance protects you against damage done to your vehicle that was not in your control, such as an animal jumping in front of your vehicle, vandalism, a wildfire, wind storm, etc. If you have a new car you have invested a lot of money in and can afford it, get both comprehensive and collision coverage.

Collision Auto Insurance
Collision car insurance will cover damages done to your automobile, even though you may be at fault in an accident. A typical policy will cover your vehicles replacement cost at the time the accident occurred.

So for example, lets say you purchased a 2007 Honda Civic coupe for $19,500 brand new and then in 2014 totaled the car in an accident while stupidly checking your Facebook account while driving. Your collision coverage will reimburse you for what the car is worth at the time of the accident, which will of course be considerably less than the new purchase price you paid.

Many people who buy new cars and get into accidents shortly thereafter end up frustrated that the insurance company will not reimburse them for a new car, rather the depreciated value of the car, which usually is thousands of dollars less, even though it is almost brand new.

Some insurance companies such as Liberty Mutual have recently began marketing new car replacement collision policies. Under this program, if your nearly new car was totaled in an accident, it can be replaced with a brand new vehicle.

Liberty Mutual now has this program for all of their automobile policies. Even though it is a bit more expensive than most other competitors collision policies, it might still be worth it.

For example, lets say you buy a brand new car every year or two, then you should check out Liberty Mutual because this extra collision insurance will be worth it in the event you get into an accident.

Collision Damage Insurance

In all states, collision damage insurance is not necessary for you to legally operate a vehicle. However, if you do not possess the car title, as you might be leasing the vehicle or have a car loan, your lender will mandate collision damage coverage.

So not only do you end up paying expensive APR interest on car loans, but more expensive auto insurance. If you can afford it, it makes sense to buy a car outright, rather than finance it.

On the flip side, collision car insurance might not be as expensive as you think. One way to get a lower rate is to get a higher premium. Choosing a premium of $1,000 or more, will bring the cost of collision damage insurance way down, while still providing the extra coverage.

It is important to note though that if you do chose a high deductible and are in a small accident, then you are lowering the insurance companies costs they will be liable for. For example, lets suppose you backed into a pole in a parking lot and caused $1,050 in damage to your car.

If you have a $1,000 collision damage deductible, then you will have to pay a $1,000 initial cost towards the repair, leaving the insurer with only $50.

In some cases, people that get into minor incidents such as a back up dent to their bumper, never report the incident to their insurance company. The person can save money by just getting the car fixed and not run the risk of their insurance premiums going up.

Maybe you don’t need Collision Insurance

collision insuranceIf you own the title on your automobile then there is no law that forces you to buy this added protection. It really makes sense though to buy collision automobile insurance if you have an expensive car, such as a late model Lexus or Mercedes Benz. If your car was damaged and totaled, without collision coverage, you could end up losing thousands. However, if you are undecided as to whether it is smart or not to add this coverage, lets look at some reasons you might not need it.

1. You have a used car that you rarely drive

If you only drive a few miles a week with an older car and are a safe driver, the chances of you getting into a serious accident are low. You could save the money you would otherwise spend for collision protection and invest it. In the event your used car was in an accident and damaged, you would have money set aside for repairs or even a total replacement.

So to illustrate, lets say you have a pick-up truck you love that you only drive once or twice a month that is worth $2,000. Is it really smart to pay an extra $50 monthly in collision truck insurance when you can save $600 a year by not adding it. The choice is yours and hinges on your comfort level with risks.

2. You have a car that is not worth much at all

If you have a car that is broken down and barely makes it to the corner 7/11 and is worth less than $3,000, then it might be smart not to add collision insurance on it. The older your car is, the more it will depreciate, leaving you with a less valuable car to insure.

This is totally not cost effective in terms of what you are paying out in relation to what you are insuring. Check the Kelly Blue Book value of your car and if it is worth less than $5,000, you might want to consider dropping collision damage insurance.

3. You have paid off your loan

If you now own your vehicle outright, you can choose to cancel the collision coverage that was previously mandated by the lien holder. Again, think about the replacement cost of your car and other factors such as how much you drive and your environment before cancelling coverage.

Cheap Collision Insurance
The cheapest collision insurance policy search should start online. Get multiple policy quotes with leading sites like CarInsuranceEstimate.org. The quote will match you with up to 10 national insurance providers in just a few minutes. You can also qualify for online discounts such as military and teacher, which will save you even more. Apply for cheap collision insurance today.