Generally, vehicle owners covered under auto collision insurance agree to pay a certain amount every month as premium for buying insurance. The insurance company is then responsible for paying for the damages that have been caused to a vehicle in an accident. A driver typically pays his part of the deductible first when involved in a car accident. Following this, the company or agency is required to shell out funds for the repair of the car as part of the policy.
Individuals must however remember that auto collision insurance is optional and is generally good only for drivers having a clean track record. Damages are paid for at-fault drivers' vehicles solely. It is mandatory liability insurance that covers the other party involved. Over a period of time, this kind of insurance can turn out to be quite expensive. This is mainly because a portion of the monthly car insurance payments are obtained from collision coverage. What’s more, this type of coverage is synonymous to the value of the car and hence it doesn’t really make sense to have one for an old or inexpensive vehicle.
More often than not, auto collision insurance is calculated and determined on the basis of the car’s value. In the event an old car is involved, the highest payout by the agency is near about the same as the value of the car, subtracting the deductible that the insured pays for from his own pocket. Old cars that require drivers to pay monthly rates so that the repairs are covered for post a collision can turn out to be more costly than the overall insurance. It hence does make sense for drivers of older cars or cars having a low value to drop out auto collision coverage completely.
On the other hand, cars that cost a significant amount must be backed up by auto collision insurance. They may also consider comprehensive coverage as a precautionary measure. In the event of a major collision, such insurance may involve the payouts at much lower rates. High value car owners can further look forward to fixing a higher deductible so that they can make the most of the insurance offered.
Auto collision insurance has the insurance company typically pay for the repair after the deductible has already been paid by the insured person. However, the payout provided by the company could have a direct impact on the value of the vehicle that has been insured.
