What is collision coverage? Have you thought why you may need collision coverage? Well there are plenty of reasons you do and don’t. Lets explore both and then you can choose which option is the best for you.
First you need to understand what collision insurance covers. The NAIC (National Association of Insurance Commissioners) lists an abundance of auto insurance information and state, “Collision coverage pays for the physical damage to your car as a result of your auto colliding with an object, such as a tree or another car. This is relatively expensive coverage. Remember, this coverage is optional and not required by law.”
That being said we now know that collision pays for your car if you hit something. But it doesn’t cover everything you may hit. For example if you hit an animal such as a moose your comprehensive coverage takes care of that. The best answer to fully understand what your particular collision insurance covers, would be to dig into the declaration page of your actual policy.
So, now the question is why do you need collision coverage and can you get cheap auto insurance without it. Actually, you need collision coverage if you are automobile. You will discover that the contract in these two situations usually require that you maintain certain coverage as a stipulation to your lease or financing contract. Other than that it is a pure personal and financial decision to have Collision Coverage.
They rule of thumb is if you can’t afford to repair your automobile on your own and the automobile is worth more than $2,000 you should consider it. The one thing that comes into play as your vehicle is your deductible amount.
For example, if you own a Honda Accord that is ten years old and it’s blue book value is $2,000 and you carry a deductible of $500 for collision coverage is it worth it to you. If an accident occurs and damages are over $1,000 most insurance companies will list your car as a total loss. They will also give you the lowest amount possible for your per year for the coverage. You have to pay another $500 for your deductible and the insurance company only gives you $1,600 for your totaled automobile. You are left without a vehicle and $950 minus your expenses to put down on a new vehicle. This is why it becomes a personal financial decision if you should maintain collision coverage, at this point it’s a craps shoot.
If you are looking for discount auto insurance is it better to compare auto insurance quotes and apply all the discounts that are available, then to try to cut cover coverage just for the sake of lowering costs. By comparing quotes from different companies alone might save you enough to consider keeping all the coverage’s you currently have.
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