How Collision & Comp Auto Insurance Coverages Benefit You
Car Insurance Coverage
The most common insurance coverages are collision and comprehensive coverage after your basic liability. In this article you will be shown what is included in collision and comprehensive coverage and the differences between the two coverages. Then when you so online to get free insurance quotes you’ll be more knowledgeable.
Collision Coverage
Will pay for damages to your car from hitting another object, such as another car, tree, house or mailbox. This coverage is relatively expensive compared to the other coverages listed in your car insurance policy. Collision coverage is not required by law but may be by your financing or leasing company.
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 (Other than Collision) 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.
When considering collision and comprehensive coverage, you should consider your deductible. A deductible is an amount of money you agree to pay as part of a claim before the insurer is committed to pay the rest of the claim. For example, if you carried collision coverage with a $200 deductible and you had a $500 loss, you would have to pay $200 and the insurance company would have to pay the remaining $300.
Having a deductible lowers the amount you have to pay for insurance because you are agreeing to take on part of the risk. The insurance companies also likes this because it reduces your chance of filing small claims, which are costly for them to process.
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.
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