The Basics of Collision Coverage

One type of coverage that comes on an automobile insurance policy is collision coverage. This coverage is available in various limits, pays for damage only when another vehicle is involved and the cost of the coverage can be lowered by making changes to the policy. Collision coverage is the major component of an automobile insurance policy.

Collision coverage that is part of an automobile insurance policy is available in various limits or coverage amounts. Generally, newer vehicles have insurance policies that have full coverage for all of the policy limits. Full coverage usually means carrying an adequate coverage limit for each type of coverage on the policy. Coverage limits are available ranging from $40,000 or $50,000 to $500,000 or more depending on the amount of coverage that is needed. An insurance company usually offer this coverage in amounts that are high enough so that an individual is not under insured. Many states also require a minimum amount of coverage to be carried on an automobile policy.

Collision coverage is designed to pay for damages that result from the collision of one vehicle with another. This includes fender benders or any other type of accident that can occur on a busy road or highway. Some states have what are called no fault insurance laws which require insured’s involved in an accident to file a claim with their own insurance company. An insurer will only pay up the the maximum limit on the policy. This means that if it costs more to repair a car than what the insurance policy will pay the insured is stuck paying the rest. Usually though insurance companies will not sell an insurance policy that under insurers a driver.

Collision coverage along with all other coverages on an automobile policy is used to calculate the premium. As a result the cost of this coverage can be reduced by applying various discounts that are available on the policy. There are a variety of discounts that are available for an automobile policy including a multi-policy discount, a multi-car discount, anti-theft devices as well not having made any claims in a specified time period. This also includes increasing the deductible amount on the policy. Discounts are designed to lower the premium because they are seen as lowering the risk to the insurer. They can also be used to offset an increase to the coverage limits.

Collision is a major component of an automobile insurance policy. The other two are comprehensive and liability. Collision is seen as a way to insure a vehicle as the result of an accident. However, the accident has to involve another vehicle or another coverage applies.