Collision Insurance

Collision insurance covers the authorized motorist or vehicle owner for financial obligations resulting from any accident in which the vehicle is involved regardless of which driver is at fault. The insurance industry also refers to collision coverage as a Collision Damage Waiver. A collision occurs when two vehicles collide, or run into each other, or one vehicle hits or is hit by another object, such as a tree or wall.

If a motorist is covered for collision, the insurance company will pay the costs to repair or replace the vehicle regardless of whether that motorist was the driver at fault, even if the other motorist only had uninsured motorist coverage. Collision coverage carries a deductible and this will be deducted from the total cost and is payable by the motorist. The insurance carrier will pay the remainder of the cost, up to the limit of the policy.

Collision and Comprehensive

Collision coverage is required by companies who lend money to customers to buy vehicles, as a protection of their financial interest in the transaction. Even if there is no loan, it is a good idea to maintain collision insurance. Some financing agents will demand a specific amount of deductible, which is that portion of the cost of repairs or replacement that the customer is responsible for paying. The higher deductible reduces the premium payment, which theoretically improves the likelihood that the customer will be able to maintain a valid insurance. Equally importantly, it reduces the need for insurance payouts, and the size of those pay outs when they do happen. This is an important point of consideration for future insurance costs because the greater the number of claims a person files, and the greater the amount of those claims, the higher will be the rates that person will pay for insurance in the future.

Financing agencies also almost always require that the customer purchase a comprehensive automobile coverage policy, in addition to the collision coverage. Again, even if no financing agent is involved, comprehensive insurance is very important to maintain. It provides financial coverage for almost any occurrence that might involve a vehicle, with the exception of collisions. Damage from vandalism or fire, is covered. So is loss due to theft. Comprehensive coverage also covers a vehicle that is damaged in a flood. This is an important consideration for people living in areas where flooding occurs, because insurance purchased as a natural disaster rider to homeowners or renters insurance does not protect vehicles that get damaged in a flood.

It is possible to purchase collision insurance without also buy comprehensive automobile coverage, and neither one of these is required by law. However, together they provide protection for almost every likely occurrence.

Collision and Third Party

Collision insurance is especially important to have if one chooses to purchase only a bodily injury liability protection, property damage liability coverage. These kinds of coverage are often referred to as third party coverage because they provide for the property or person of the other person or persons involved in an accident and not for the policyholder. Third party coverage pays the medical and other expenses of the other person or persons involved in an accident caused by the policyholder. It will for repairs to the other vehicles, or will pay their replacement costs.

If there is no collision coverage clause in the motor vehicle insurance policy, the owner of the vehicle causing the accident will have to finance the loss of use and any repairs to his or her vehicle from personal sources. If the policyholder is hurt in the accident, he or she will have to rely on personal medical insurance coverage, or pay out of pocket.


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