What Does “Collision Coverage” Mean?
When in a car accident, one of the major concerns that many people face is how they are going to pay for any damages to their car. Having “collision coverage” on your policy can help ease your concerns in such a situation. “Collision coverage” commonly refers to optional coverage for damages to your car caused by impact with another vehicle or stationary object (i.e. a tree or telephone pole), minus your deductible, regardless of fault. Collision coverage does not cover the cost for damages to the other car, and it does not cover you for injuries you or someone else sustains in the accident. Additional liability insurance might need to be purchased to cover you in a case involving a lawsuit due to injuries caused in an accident. Your personal injury lawyer will be able to look at your auto insurance policy and advise you on the types of coverage you have.
One key component of collision coverage is the collision deductible. The collision deductible is an agreed upon amount between you and your auto insurance company that determines how much you will pay, out of pocket, in the event you are in an accident that causes damages to your car. The collision deductible varies from person to person and can range between $0 and $1,000. When purchasing collision coverage on your insurance policy, it is important to choose a deductible that is right for you based on what you are comfortable paying out of pocket.
Another key component of collision coverage is the cash value of the car that is damaged. Cash value generally refers to the market value of the car before the accident, minus the salvage value of the damaged vehicle. Remember that as soon as you drive your car out of the dealership parking lot your car loses value. As your car ages it further decreases in value. To help find out the value of your car, you can use the N.A.D.A Guides and Kelley Blue Book. You should take into consideration that these guides may not accurately reflect the exact value of your car because of factors, such as age, mileage, and use.
Unless you choose to lease or finance a car and your bank requires that you purchase collision coverage, it is not required and might not be worth purchasing for some people. When buying collision coverage, you should take into account the age of your car, what the value of your car is, and how much you think repairs would cost. It is also important to remember that collision coverage can be beneficial if the accident results in legal proceedings, if the other driver is at fault but has no liability insurance, or if your accident involves a stationary object that clearly has no insurance to cover the cost of your damages. If you are undecided about whether or not to purchase collision coverage, it is always helpful to speak with your insurance agent to see if this type of coverage is right for you.
If you are involved in a car accident, remember that is important to work with a personal injury lawyer, as well as your insurance agent, to facilitate the aspects of your case. Please call us today at 202.955.4529 to speak with a legal representative about your potential case.