When it comes to paying for damage to your own vehicle, your first line of defense to recover from auto accidents is collision coverage. Many drivers are convinced they’ll never wreck their own vehicle, or that they’ll never be involved in an accident. Unfortunately, the Insurance Information Institute reports that the frequency of collision-related insurance claims grew more than 7 percent in recent years. The extra protection could prove well worth the investment.
Three Ways Collision Coverage Serves You
Only collision coverage pays for damage you cause to your own vehicle, but contrary to popular belief, you can also use it for accidents in which you were not at fault. And really, there are three different ways collision coverage can work to your benefit if you find yourself at the wheel after an accident:
Collision coverage pays for damage to your vehicle when YOU cause an accident.
If you wreck your own vehicle, your insurer will pay for the cost to repair the vehicle, or if the cost to repair is more than the value of the vehicle, they will pay to replace it based on its market value at the time of the accident.
Collision coverage pays for damage to your vehicle when ANOTHER DRIVER causes an accident.
Your insurer will pay your damages and then go seek reimbursement from the other driver’s insurance.
Many drivers take advantage of this option when the at-fault driver’s insurer is being difficult or slow to act. You will typically have to demand your insurer take action in this scenario, but if you paid for collision coverage, you have these benefits.
Using this option should not raise your rates, since you were not at fault. Be sure to ask your insurance adjuster whether a scenario will or won’t affect your rates before choosing your course of action.
Collision coverage pays for damage to your vehicle in circumstances not covered by other sections of your policy.
If you do not purchase comprehensive coverage for vandalism, acts of nature, theft, etc., then you can typically claim such losses under collision coverage.
For hit-and-run accidents or damage caused by a driver with no insurance, you can typically claim such losses under collision coverage.
Using collision coverage in these scenarios may raise your rates, as your insurer may assess such damage as if you were at fault or caused it yourself. This is why it’s best to carry comprehensive (COMP) and underinsured motorist (UIM) to pay for damage in any scenario.
Adding collision insurance coverage to your auto policy will of course increase the cost of your monthly premium, however the amount of increase will vary greatly from driver to driver, depending on several factors. According to the Insurance Information Institute, certain factors affect the cost of a driver’s insurance premiums. Such factors include level of education, income, age, gender, credit score, driving habits, driving history, geographical location, and the vehicle you drive. Gathering quotes from multiple insurers is the best way to know what your premiums will cost and where you might get the best deal; just make sure you’re comparing equal coverage and policy limits when getting quotes from different insurers.
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