Car Insurance Coverage
The most commonly recognized coverages, in addition to the basic liability are collision and comprehensive coverages also known as other than collision coverage. This article will explain the differences in coverage and what is covered so when you get free insurance quotes you will be well informed.
Collision Coverage
Collision coverage pays for physical damage to your car as the result of your auto colliding with an object, such as a tree or another car. This is relatively expensive coverage. Remember, this coverage is optional and not required by law. However, collision insurance might be required by your lending institution or lessor.
If you have an older vehicle worth less than $2,000, there is little reason for you to purchase collision coverage, because you are likely to pay more money in premium than you would ever receive as a result of a claim. Auto insurance policies only require the company to cover your financial expenses, not to replace your vehicle. In the case of an accident involving an older car, the cost of repairing the car can quickly exceed the worth of the car. In that case, an insurer will “total” the car and pay you what the car was worth rather than fixing it. In severe cases, the worth of the car might not exceed the premiums paid for the coverage.
Comprehensive Coverage
It can also be known as other than collision coverage and it pays for almost all other damages to your vehicle. Coverages include vandalism, theft, hitting of animals, fire, severe weather and floods. It will also cover damage to your windshield or windows. It doesn’t cost as much as collision coverage and is also optional and not required by law, although it may also be required by your financing or leasing company.
An important thing to consider when purchasing collision and comprehensive coverage is your deductible. Many companies offer zero dollar to $2500 deductibles. The deductible is the amount of money you will pay if you file a claim before the insurance company pays there share. For example, if you have a $500 comprehensive deductible and file a claim for $1300, you pay $500 and the insurance company will pay the remaining $800.
In essence, the deductible lowers your premium because your are taking part of the financial burden off of the insurance company unless you choose a zero dollar deductible also known as a full deductible. The reason insurance companies offer deductibles is because it decreases the chance of you filing a small claim, which are expensive for the insurance company to handle.
If you purchase a new car with a loan, the financial institution that loaned you the money might require you to purchase comprehensive and collision coverages. This is because they see your car as collateral for the loan, and they want to make certain it is worth something if they need to repossess it.
In the event you have to buy, or decide to buy, collision or comprehensive coverage, you can save money by agreeing to the highest deductible you can afford to pay in the event of an accident. However, because comprehensive coverage is usually cheaper than collision coverage, many people save money by dropping the collision coverage and keeping the comprehensive coverage to protect against natural perils, theft and glass breakage.
Tags: Autos