Some people do not understand how auto insurance works and what types to purchase. As a result, some might choose the wrong kinds of coverage, and others might not buy enough coverage. One type you can buy is collision coverage. If you do not know what this is or how it works, continue reading to learn four vital things about collision auto insurance coverage.
1. It Protects Your Car
Collision coverage is unique in one way — it protects your car. When you buy liability insurance, it does not cover your car. Instead, it protects other vehicles. Having collision coverage protects you more than any other auto insurance coverage, and you should consider adding it to your policy to have more protection.
2. It Covers Your Car According to Its Value
When you must file a claim against your collision coverage, the insurance company bases it on the amount of damage caused by the accident. The insurance company then compares the damage to your car's value. Insurance companies will not pay you a higher amount than your car is worth. If you total the car, you will only receive compensation for the vehicle's actual value just before the accident.
3. You Must Pay a Deductible
When filing a claim on your auto policy, you will have to pay an amount before the insurance company compensates you for your damages. This amount is the deductible, and it might be $500 or $1,000. It could be more or less than this, too, but you get to choose. If you want to pay less when you have an accident, choose a lower amount. If you want lower premiums for your policy, choose a higher amount.
4. It Covers It Only When You Cause an Accident
The last thing to know is that collision is only available to use if you cause an accident that damages your vehicle. If you cause an accident that damages someone else's car, that person can file a claim against your liability coverage. If someone else causes an accident that damages your car, you can file a claim on their policy. Collision is only for times when you cause an accident and have damage to your vehicle.
Having collision coverage protects you a lot, and that is one of the top reasons to buy it. If you have questions about collision or other coverage types, reach out to a company like The Policy Center.