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Types Of Car Accident Insurance Coverage: Collision Coverage


One of the most common types of car accident insurance coverage is called collision coverage. This type of policy covers damage to your vehicle when you are hit by another car, or if you crash into another vehicle or object. The coverage pays for your vehicle minus your chosen deductible. To keep your premiums low, you can choose a deductible as large as you are able to pay.

How Much Should You Pay For Collision Coverage?

You are responsible for paying the amount you see. This amount is known as deductible. The cost of your car accident insurance premium decreases if you pay a higher deductible.

If you have a financed or a leased car, you can benefit from having this type of coverage. In this case, your finance company will require you to have this type of car accident insurance coverage. Car owners who have new cars may need collision coverage to replace their cars in case of any damage. People with older cars, however, may not benefit from this type of coverage, since the coverage they will get is only limited to their car’s cash value.

Collision coverage policy basically protects your vehicle from damage. The policy can cover all the expensive repairs on your car. If in case your car becomes a “total wreck”, your auto insurance provider will pay you according to your car’s cash value, so you can buy a replacement. This policy will still pay you, even if you are the one at fault for the collision. In case it is a third party damage, meaning another party is at fault for the damage, that driver’s liability insurance coverage will shoulder the expenses.

This type of policy comes with options for deductibles. You can lower your monthly premium by selecting a higher deductible. Deciding to have a higher deductible means you will pay more out of your own pocket for your car’s repair or replacement. For instance, if you select your deductible at $1,000, and your car’s damages total at $1500, you will shoulder the $1,000 and your provider will shoulder the $500.

Keep in mind that this policy only pays for damages that are directly related to an accident.  For damages caused by other factors such as theft, vandalism, fire and extreme weather conditions, you will need to get a comprehensive coverage policy. State laws may not require you to have a collision coverage policy. However, if you have a car that is on loan or lease, this type of car accident insurance coverage will be required by the finance company.