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Features of auto collision insurance

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Auto Collision Insurance is a type of insurance coverage help to recover the expenses incurred for repairing the vehicle or replacement of vehicle damaged due to car accident. The insurance is applicable to the accident that occurs while the vehicle is driven by insured person and it applicable to vehicle of insured person. Other damages occurred due to theft, damages due to weather condition, vandalism, etc are not covered under auto collision insurance. 

The main feature of this insurance is, it as an optional insurance that can be added to the existing insurance policy. For instance, while availing vehicle loan or when the vehicle is leased, the lien holder may insists on auto collision insurance as part of the lease agreement.   On acquiring the insurance policy, the terms and conditions of the policy must be designated by the insured party. The party must decide on the policy limit. The insurance company generally fix a standard limit towards coverage. But the insured party can raise or reduce the amount. Before availing the compensation, the insured party has to declare the deductible amount, which has to be paid by the insured party. This deductible amount is also fixed by the insurance company and the insured party has the option to raise or lower the amount.

Auto collision insurance is available with two types of coverage. First type refers to insurance coverage towards replacement cost. The insured party is provided with enough money towards replacement same type, model and make of damaged vehicle. The insurance does not look into wear and tear on the vehicle. The other type of insurance coverage is referred as cash value coverage. When the vehicle is damaged due to accident, the insured party has been paid the actual value of the car assessed at the time of accident or crash.

Auto collision insurance benefits one who gets into an accident. The insurance company assess the value of damage and decide on expenses to be incurred for repair or replacement. The insured party is liable to pay the deductible amount and the same is deducted from the assessed value to recover the damages. The balance amount as assessed by the insurance company is then paid to the insured party or to the repair shop directly.

The amount of insurance coverage and deductible amount determines the premium amount. The premium will be higher for higher coverage value and lower deductible amount and vice versa. But many people choose for a lower insurance coverage amount with higher deductible amount for paying lower insurance premium. However the age, gender, marital status, etc also influence in deciding the premium amount.