Exactly What Collision Auto Insurance Covers

According to the United States Census Bureau, more than 10 million automobile accidents happen every year. Due to this fact, auto insurance companies offer a wide array of insurance coverage options, one of which is collision insurance.

Definition:
Collision auto insurance covers damage to your car if you hit, or are hit by, another vehicle or object. States do not require collision insurance but lien holders do if you have a lease or loan out on your vehicle.
Provided Protection:
The amount of damages that your collision insurance will cover depends on the amount of deductible you choose. For instance, if you choose a deductible of $500 and incur damages totaling $2,000 from a crash, your collision insurance will pay $1,500 of the total expense.
Value:
This type of insurance typically benefits, or is required for, those who have a newer vehicle or one in very good condition. If you have an old vehicle or one in poor condition, you may want to skip this coverage, as the coverage is normally limited to the cash value of your car. This means, if you incur $5,000 worth of damages, but your car’s value is listed at $2,000, your insurance company will only issue you $2,000 less any deductible you choose to pay.

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