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If you have an accident and crash into another vehicle, or a wall, a tree or any other physical object you may not be insured under basic liability insurance. Although you will be able to compensate the other party, you will not receive any compensation for damage to your own vehicle. This is where Collision cover comes in to play. Although it is not a legal requirement in most states, it is certainly an additional level of cover you should seriously consider when purchasing motor insurance.
In most circumstances your insurance company will pay out if your vehicle is damaged as the result of an accident on the road. There will of course be certain exceptions and this will be detailed in the terms and conditions of your policy agreement. Most policies will honour the claim even if the driver of the other vehicle is uninsured, under insured or unknown and it doesn't usually matter who caused the accident to occur.
It is worth noting that Collision cover is not sufficient cover if your vehicle is stolen, vandalised or damaged as a result of extreme weather conditions. This level of coverage would come under a comprehensive insurance policy.
There are several add-on features you can choose to include when applying for motor insurance. Each option will increase your premium. Some are worth having, others only suit some peoples requirements, it generally depends on your vehicle and your own personal circumstances.
It is worth mentioning that if damage is caused by general wear and tear such as bold tyres or worn down brake pads, or by mechanical breakdown this is unlikely to be covered by any aspect of insurance.
When receiving a quote for collision coverage, you will need to choose a deductible amount. A deductible is the portion of a claim that you’re responsible for paying before your insurance coverage kicks in.
In most states collision cover is not a mandatory requirement. Although damage to another persons vehicle or property must be covered by property damage liability. This will ensure you have sufficient cover to reimburse the other person for damage to their vehicle should the accident be your fault. Damage to your own vehicle is not compulsory and if your vehicle is of little value you may choose not to pay for this optional extra.
If you have borrowed money to purchase a vehicle it is likely the lender will insist you have comprehensive insurance to cover the value of the vehicle should damage occur. It is also perfectly normal for them to stipulate the deductable amount you should be prepared to pay.
Increasing the detectable amount you are prepared to pay can help to lower your insurance premium.
If this is something you are planning to do, you should ensure your lienholder is happy for you to make this change before you proceed.
Your agreed detectable should be set at an amount you can comfortably afford to pay should the need arise. It can be tempting to agree to a high detectable just to lower your monthly premium. This may seem like a good idea at the time but it can come back to haunt you if you are involved in an accident and need to find that money in a hurry. Various policy providers will allow you to select a detectable between $100 to $2500. You should also consider the value of your vehicle when making your decision. The average amount is about $500, this is a sensible amount and reasonably affordable for most people.
Remember, the deductable amount is the amount you will have to pay up front before your insurance company will foot the bill for any damage caused. Also bear in mind that the deductable amount is payable each and every time you file a claim
Quite simply, if you decide not to include collsion cover on your insurance policy you will have to pay for any repairs to your vehicle following an accident that was your fault. This can of course be very expensive and it is quite likely you will end up out of pocket.
If someone else was responsible for the damage you may be able to make a claim on their insurance if they have sufficient property liability insurance. As this is mandatory this should always be an option. You may also be able to make a claim if you have uninsured driver property damage if the driver of the other vehicle does not have insurance.
The value of your vehicle is an important consideration when deciding if collision cover is right for you. If your car is quite old, you own it out right and it is of little financial value you may decide collision cover in an unnecessary expense. The amount you receive in compensation will only be equal to the current value of the vehicle, and this may be less than the cost of the premium.
If your vehicle is of greater value it is advisable to add collision cover to your standard insurance policy. Repair bills can be costly and if the damage is severe you may have to completely replace the vehicle. Without collision cover you would have to pay for this yourself.
Most insurance companies will agree to pay you directly for a minor repair to your vehicle, slight body damage for example. If you intend to do this you should always clear it with them first. Some will insist all repairs are done by a preferred body shop only, but in most states they are not allowed to do this. Do not attempt to do major repairs yourself if you plan to make a claim as this is likely to be refused.
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