Up until recently, insurance was considered a preserve of the affluent in society. But not anymore. Insurance has since changed from being an elite privilege to a basic necessity.
Although having many types of insurance still remains a matter of individual discretion, you’re legally obligated to acquire certain policies to be considered eligible for various services. For instance, driving while uninsured is considered a misdemeanor offense in many countries.
In the United States, 49 out of 50 states require all motorists to carry insurance. Driving without valid proof of insurance can potentially lead to hefty fines or a jail term, depending on whether you’re a repeat offender or if you’ve caused an accident. The only exception is New Hampshire, where motor vehicle laws do not obligate drivers to carry auto insurance. However, motorists must still demonstrate that they can meet all financial costs in the event they cause an accident.
In this article, we narrow down our attention to one of the most common types of auto insurance – collision insurance.
What Is Collision Insurance?
Collision insurance, as the name implies, is a type of motor vehicle insurance that covers you if you’re in an accident. The accident could be one involving another vehicle or any stationary object, such as a roadside fence.
Being such a crucial type of insurance, it’s imperative to conduct deep research while scouting for the best collision auto insurance company. The good news is that the motor vehicle insurance industry teems with reputable companies that offer collision packages.
However, be sure to check a company’s background to determine that they’re experienced enough. You can gauge a car insurer’s experience by establishing the duration they’ve been providing their services while also checking trusted third-party ratings.
It’s also best to select a motor vehicle insurer whose services cater to your individual requirements. Remember that no two clients are the same. Needs vary depending on factors like your automobile’s value, your location, credit history, and accident record, to mention but a few.
Last but not least, it’s important to compare prices to get affordable Virginia auto insurance quotes before contacting a collision auto insurance company. The idea is to opt for an insurer that promises quality services at industry-competitive rates.
What Does Collision Insurance Cover?
Collision insurance typically covers the financial burden of repairing or replacing your car in the event it’s damaged in a crash. As already indicated, the crash could be one involving other vehicles or any stationary roadside objects.
These objects include;
- Parked vehicles
- Guard rails
- Road signage
- Telephone poles
- Roadside fences
- Roadside buildings
- Mailboxes
- Trees, including bushes and other roadside plants
In most arrangements, collision insurance also covers rollovers and damages resulting from hitting potholes. That makes it one of the essential auto insurance policies to purchase.
What Doesn’t Collision Insurance Cover?
Collision insurance usually doesn’t cover any medical bills associated with a car crash. You’ll need to foot such expenses from your own pocket or using a different insurance package.
Secondly, collision insurance will not pay for damages caused to your car if the other driver is at fault and their insurance is paying for repairs.
The policy also doesn’t cover weather-related events like floods or hail damage. These are normally covered under comprehensive insurance.
Incidents of theft and vandalism are also exempt from collision insurance. That’s regardless of whether your car is stolen and ends up causing an accident.
Last but not least, collision insurance doesn’t cover any damage caused to other people’s cars and property. This is another domain of comprehensive insurance.
Who Should Purchase Collision Insurance?
Any car owner or motorist should consider buying a collision insurance policy.
The coverage is particularly important if you have a lease or outstanding loans on your vehicle.
Is Collision Insurance Mandatory?
Despite being such a crucial type of auto insurance, collision insurance is optional in most cases. The decision to purchase this policy will depend on specific considerations, such as the premium costs and your vehicle’s worth.
You may opt out of collision insurance if your vehicle is old or living on a shoestring budget. But if you’ve recently purchased a brand-new automobile, it would be a great idea to get collision insurance to protect your vehicle’s asset.
And as we’ve just indicated, collision insurance coverage is paramount if you have a lease or loans on your vehicle.
How Does Collision Insurance Work?
Collision insurance works in a more or less similar manner as other insurance policies.
First and foremost, you’ll need to determine the premiums attached to your coverage as well as your deductibles.
Premium is the regular contribution you must make to your auto insurer (usually on a monthly basis) to keep your car protected. Deductible, on the other hand, refers to the amount you’re obligated to pay in the event of an accident before your insurance can take effect.
Most auto insurance companies charge an average annual premium of $1,000. Deductibles normally range from $250 to $500.
But as you might expect, these values aren’t cast in stone. The actual premium and deductibles applicable to you will depend on factors like your age, location, credit history, and driving record. Most motor vehicle insurers will also factor in the value of your car and the number of policies you intend to purchase when setting your premium and deductibles.
Now, let’s assume your car smashes into a roadside store, and it’s established that you’re at fault. Investigations also place the average damage at $2,000, but your deductible is $500. Your collision insurer will require you to pay the $500 upfront before they can offset the $1,500 balance.
Are All Collision Insurance Policies the Same?
Absolutely not. Collision insurance policies differ considerably in terms of the financial obligations and nature of the events covered.
As we’ve already pointed out, insurers charge different premiums and deductibles for collision packages. And while all collision insurance policies will pay for damage caused to another car, many companies are selective in terms of the types of inanimate objects they cover.
For instance, some insurers will not pay for damages accruing from hitting potholes. Therefore, it’s important to read the terms and conditions carefully to be at par with what’s covered and what’s not.
Another way to avoid unpleasant surprises is to purchase collision insurance in addition to the minimum liability coverage required in your jurisdiction.
Wrap Up
Collision insurance is one of the most important insurance policies any car owner or motorist should purchase. Although it’s optional in most jurisdictions, it pays to have collision coverage. That’s especially if you already have a comprehensive insurance policy.
