What is Collision Coverage Insurance?
Auto insurance policies can be broken down into two basic types of coverage, liability and physical damage.
Physical damage is a no-fault coverage, meaning your insurer will pay to repair your car whether or not you caused the damage to your vehicle.
If someone else runs into you, your insurer will pay for the damages and go after the other person’ s insurer to get their money back. This process is known as subrogation.
There are two types of physical damage insurance available on a typical auto policy: collision coverage and comprehensive coverage.
Collision coverage insures you against just that, collisions. Whether it is a collision between your car and another car, or your car and a tree. You are covered if your car sustains damage as a result of running into something or something running into it.
An example of the latter includes returning to your car in the grocery store parking lot, only to find that someone ran a shopping cart into your car door (they didn’t leave a note).
Again, whether you’re at-fault or not, when your car is damaged, you will likely want it to be repaired.
Here are some examples of when your collision coverage would be triggered by a claim:
- Any time your car collides with another car – if the collision is the other driver’s fault, their property damage coverage will pay for the damage.
- You drive into the neighbor’s mailbox – your collision coverage will pay for your car’s damage, your property damage liability coverage will pay for the mailbox, since it is someone else’s property.
- You lose control of your car and drive off the road causing it to overturn.
- You open your door into another car door in the shopping mall parking lot.
- You’re also covered in the event you damage one of your own cars with another car you own (the good news is only one deductible applies is this situation).
Tip: It is important to note that an insurance deductible is only paid on claims covered by the physical damage portion of your policy, not for liability claims.
Additionally, a collision coverage deductible is generally lower than a comprehensive coverage deductible.
Also note that lenders (lien holders) typically require you to carry physical damage coverage on an automobile you still owe money on. This ensures that they’ll receive money for damages to a vehicle they still technically own.
Contact your insurer or independent agent if you are unsure about which coverage you currently have, or if you want to change or increase your current coverage.
