Collision Coverage: What Is It?

Definition

Collision insurance covers the costs of repairing damages or recovering the cash value of your car if it is destroyed when it collides with something while driving.

What is Collision Insurance?

Collision insurance covers the costs of repairing your car only, not for any other cars or drivers. In most states, it only applies when you are at fault for an accident or if your car is damaged and you do not know who or what caused the accident.

How Does Collision Insurance Work?

Most states have laws requiring all drivers to carry a certain level of car insurance if they plan to drive a vehicle in the state, often for bodily injury coverage and liability for property damage. However, collision insurance may not always be part of these basic requirements. You may choose to add collision insurance to your current auto insurance policy whether or not the state mandates it. This can be beneficial in the long run, as the costs of repairing your car after an accident can be massive. The accident becomes more costly if you are renting or leasing a vehicle. On average, collision insurance will cost you an additional $290 per year.

What Types of Events are Covered?

There are several scenarios that are considered “collisions” that fall under this type of policy:

• Car Accidents: If your car hits another car (regardless of whether you are at fault or the other driver hits you), you are in a collision situation. Collision insurance will apply to at least one of the cars involved. If the driver at fault for the accident does not have collision insurance, they will have to pay the costs of repairing their car out of pocket.
• Potholes: While avoiding a pothole may be easy, if it happens to you and your car gets damaged, the repair costs are likely to be covered. Insurance companies consider damages caused by a pothole to be a collision. Again, this type of coverage must be specified in the primary auto insurance policy to cover the repair of the car.
• Trees: Oddly enough, it matters whether you hit the tree or the tree hit you. A fallen tree is considered part of a comprehensive claim. Striking a stationary tree or even a tree that has fallen before you hit it is considered a collision.
• Barriers: Simply put, hitting any stationary object is a collision. Whether you hit a barrier, a stop sign, a mailbox, or a building, all of it is considered a collision. It doesn’t matter if the damage is a small scratch or a big dent. The bottom line is that contact with an inanimate, stationary object that leads to damage to your car is a collision.
• Potholes and Drains: If you have been on icy roads and slid into a pothole, or had to avoid hitting something on the road and dropped into a pothole, you know that a pothole or a drain can cause significant damage to your car. Debris lodged in the bottom of your vehicle can hinder numerous functions, and you may need to visit a technician. Upside-down cars are more prone to damage. Physical damages throughout the car (as long as they are not of the type covered elsewhere) will always be covered by the collision part of your insurance policy.

Types of Collision Insurance

Is it a repair or a total loss? If you have collision insurance, the insurance company has two options to make you whole again. Either your car will be fully repaired, or you will be paid the cash value of your car in the case of a total loss. Here’s what you can expect:

What to Expect if Your Car Can Be Repaired?

In most cases, aftermarket or used parts will be used to repair your car as they are cheaper. If you prefer original parts from the manufacturer for your make and model vehicle (OEM parts), you will need to specify this as an add-on to your insurance policy when you first registered. Some insurance companies offer this option and some do not, so if the source of the parts is important to you, be sure to raise the issue of OEM parts and terms when signing up.

You must

To restore your car to the condition it was in before the accident, as if no damage occurred. This sets the standard for what to expect from the repairs covered by your insurance company.

Any recent repairs or replacement parts you have made can help increase the cash value of your car. Look for receipts for any recent car repairs you have done to help facilitate this process and get a better payout.

What to Expect If Your Car is a Total Loss?

If your car is a total loss, an insurance claims investigator will work with you to determine the actual cash value of your car at the time of loss. This amount will not be the same as what you paid for the car, as time has passed and wear and tear will affect the new value. The current market value of your car at the time of the damage may also be a factor.

Does It Matter Which Driver is at Fault?

It may not always be clear who is at fault in the event of an accident. It may happen that both parties involved insist that neither is responsible. If this happens to you, you can file a claim under your collision coverage and allow the insurance company to work on compensating you.

Compensation means attempting to recover a claim after liability is determined. It allows you to repair your car immediately after the accident. It also allows you to receive compensation right after the repair, without waiting to see who was at fault. Then in the future, if the claim goes in your favor and you are compensated, this can wipe out your claim status. There is no law stating that your insurance company must assist in recovering a claim for you. However, many ethical laws require it. You may want to speak to your agent about how payments are handled when fault is still in discussion.

Regardless of the state you live in, if you are at fault for an accident (meaning you are the driver who caused it), you should have collision coverage in your car insurance policy to cover the costs of either repairing the damages to your car or the full cash value of your car in the event of a total loss.

Takeaway

Collision coverage pays for the costs of repairing or replacing your car when you collide with another vehicle or object. Drivers should choose collision coverage as part of their policies, as it is not the default or mandatory option. Unless you choose an additional rider that pays for original manufacturer parts, your car will be repaired using used or aftermarket parts. States vary in how they handle driver fault issues as well as the level of coverage required to drive in the state.

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Source: https://www.thebalancemoney.com/what-is-collision-coverage-527420

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