There are different types of auto insurance policies that a person can choose from. Every person who owns a vehicle is well aware that he needs to have coverage before he can take his vehicle to the road. This is done to comply with state laws and protect himself from liability and legal charges he may face in the event of a car accident.
One form of vehicle protection is auto collision insurance. In this coverage, an insurer agrees to pay for cost of repair or replacement of a car damaged in a traffic accident. This policy deals with accidents that took place while the insured person is driving. Unlike liability insurance, this policy applies for the policyholder’s vehicle. Insurance that covers property and bodily injury coverage is called liability insurance. Coverage for loss or damage caused by flood, fire, vandalism and theft is called comprehensive insurance.
One common misconception of car owners is that they think auto collision insurance is required by law. This policy is optional and can just be added to an insurance contract. Nevertheless, cars purchased through car loans are often required to carry this type of protection as it forms part of the loan agreement.
A person who purchases auto collision insurance must choose the terms of coverage and its limit. Coverage limit is the maximum amount of payout coming from the insurance company. Generally, the limit is $100,000, but a policyholder can either raise or lower this amount. A deductible must also be agreed upon by an insurance buyer and insurer. The deductible is the maximum amount of cash that a person must pay out of his pocket before an insurance company finally takes over the payment. A higher deductible would usually lower premiums that a person has to pay in exchange for his protection.
Auto collision insurance is an important type of coverage as it is highly beneficial if one gets involved in an accident. What an insurer does is assess the damage and decide how much repair or replacement would cost. The deductible is subtracted from the benefit payout and a check is written to pay for repair costs or settlement fees.
Shopping for the right insurance may be a tedious task especially if a person wants to get the best deal for his budget. It is best to know the bases of premiums so that one can expect how much he is going to pay. Another thing that he can do is inquire from several insurance companies, get quotes and compare each of them against policies and benefits before finally choosing which policy to purchase.
