Tuesday, April 15, 2008

Car Insurance Benefits Of Collision And Comprehensive Coverage

Auto Insurance Coverage

The most commonly recognized coverages, in addition to the basic liability are collision and comprehensive coverages also known as other than collision coverage. This article will explain the differences in coverage and what is covered.

Collision Coverage

Will pay for damages to your car from hitting another object, such as another car, tree, house or mailbox. This coverage is relatively expensive compared to the other coverages listed in your car insurance policy. Collision coverage is not required by law but may be by your financing or leasing company.

If you have an older vehicle worth less than $2,000, there is little reason for you to purchase collision coverage, because you are likely to pay more money in premium than you would ever receive as a result of a claim. Auto insurance policies only require the company to cover your financial expenses, not to replace your vehicle. In the case of an accident involving an older car, the cost of repairing the car can quickly exceed the worth of the car. In that case, an insurer will "total" the car and pay you what the car was worth rather than fixing it. In severe cases, the worth of the car might not exceed the premiums paid for the coverage.

Comprehensive Coverage

It can also be known as other than collision coverage and it pays for almost all other damages to your vehicle. Coverages include vandalism, theft, hitting of animals, fire, severe weather and floods. It will also cover damage to your windshield or windows. It doesn't cost as much as collision coverage and is also optional and not required by law, although it may also be required by your financing or leasing company.

When considering collision and comprehensive coverage, you should consider your deductible. A deductible is an amount of money you agree to pay as part of a claim before the insurer is committed to pay the rest of the claim. For example, if you carried collision coverage with a $200 deductible and you had a $500 loss, you would have to pay $200 and the insurance company would have to pay the remaining $300.

Basically, deductibles reduce your premiums because you agree to deduct a set amount from the claim your insurer otherwise would have to pay. Insurance companies offer deductibles because they reduce the number of small claims, which are costly for them to handle.

If you lease or purchase a new car and have a loan, the lending company will might insist you have collision and comprehensive coverage with deductibles no higher than $1000 each. The reason the require this coverage is to make sure the car is worth something in case you default on your payments and they have to resell your car to recoup there money.

If you decide or are required to buy comprehensive and collision coverage you can reduce your cost by agreeing to higher deductible but remember that will be the amount you need to pay before the insurance company pays there share. As the car gets older many people choose to only have comprehensive coverage to protect themselves against other than collision claims. This will help them secure cheap car insurance on an aging vehicle.

Article Source: http://keywordbeast.com

No comments: