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Salient features of auto collision insurance explained

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Auto collision insurance is a form of insurance that will pay for any damage incurred during an accident for your vehicle. It will apply only to those accidents that happen when the insured individual in driving the car and it is only applicable to that vehicle which is insured in that persons name. Any damage done to other property will be covered by liability insurance. Loss or damage that is caused due to other factors other than an auto accident will be covered under comprehensive insurance.

Misperceptions associated with auto collision insurance

It is not required by law to have collision insurance. But it is necessary in all states to have auto liability insurance. Collision insurance is just an option that can be added to a conventional auto insurance policy. But if you have a car loan then the lender might require you to have collision insurance as part of the agreement that you have signed for the loan.

Common features of such an insurance policy

When you buy collision insurance, you need to designate the terms of the policy. You will first have to decide the policy limit. This will be the highest amount that the company will pay you in case you end up being involved in an accident. The coverage limit will normally be around $100000 but you have the option for getting more or less. You will also have to declare a deductible amount. It will normally be around $500, but again you can reduce it and pay more premiums or vice versa. The deductible is that amount which you will pay in case there is an accident.

Collision insurance is very useful when you find yourself involved in an auto accident. Your company will assess the damage incurred and will then determine the cost of repairing the vehicle. After deducting the deductible, they will pay out the rest of the cost up to the coverage limit. You will either get a check from them on producing the bills or they might remit it directly to the repair shop.

The coverage limit and the deductible will determine the amount you pay out to the insurance company every time period as premium. If you have a higher coverage limit, you will have to pay more premiums and vice versa. And again, your deductible amount will also decide the cost of the premium. The price will also be influenced by many other factors like the persons driving record, type of car, age of the driver, area of registration of vehicle, and the condition of the vehicle. Other factors like gender, marital status, and even occupation can affect your premiums. The automobile insurance business is extremely competitive and rates vary a lot between companies. But all in all, you should get similar coverage plans for a given cost while service might vary with cost. And remember, collision coverage is just an added benefit that you can get with your conventional policy and it may or may not cover the entire requirement stipulated by your state in the United States of America.