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Understanding some basic, but important, facts about auto collision insurance


It is mandatory that you have some basic auto collision coverage in the US. It is against the law to be driving around without auto insurance. If you wish to drive around legally then you will require the basic liability cover. With this cover you will be able to cover costs up to a certain fixed amount if you get hit by another vehicle, objects etc. This coverage will not include fixing your vehicle.

The next big coverage is the full coverage that includes the comprehensive as well as the collision coverage. This type of coverage basically means that the insurance company will cover the costs up to a fixed amount for different types of accidents and will also pay for repairs that your vehicle will incur.

A deductible is the amount you agree to pay while purchasing the policy. This is a one-time payment that is paying for a part of the damages. This could range between 100 to 500 dollars most of the time. If you pay a higher deductible you will be paying lesser premiums and if the deductible is lower, then the premiums will be much higher. The deductible will not change but will remain the same irrespective of the money the insurance company has to shell out.

The type of coverage you need will largely depend on the vehicle you own, where you drive, what is the damage you want your insurer to pay for in the event of an accident. The costs will vary depending on many factors such as the age of the driver, the driving record, and the areas the vehicle will be driven.

There are predetermined amounts that will be paid by the insurance companies in the event of an accident. However, with some companies these values may be changed but the premiums will either increase or decrease depending on the coverage you want. If you have a brand new car, it makes sense to take a full coverage because if you hit something most of the companies will pay up the fair market value of the vehicle. However, if you have purchased only basic liability coverage then you will get nothing to fix your new car. If you have taken some form of loan from the banks or lenders to purchase the car, then it will be mandatory for you to take a full coverage until the term of the loan. Choose the coverage based on the vehicle you own.