Two types of insurance cover damage
to your vehicle.
- Collision coverage pays for damage to
your vehicle caused by a collision or roll over.
- Comprehensive coverage pays for damage
to your vehicle from some cause other than
collision such as theft, fire, vandalism,
flooding, hail or collision with a bird or animal.
Generally, collision and comprehensive do
not pay for the entire loss because you
almost always purchase these coverages with a deductible.
How Deductibles Affect Price
A deductible is a specific amount of money
you pay before your insurance company begins
to pay on a claim. Higher deductibles result
in lower comprehensive and collision premiums.
Most insurance companies reduce their
payment because of depreciation, which is
the decrease in the value of your vehicle,
or its parts, due to wear, tear and age.
You would not, for example, be reimbursed the
full price you paid for tires that have 20,000
miles on them. Your insurer would reimburse
you for the value of the tires at the time of loss.
By using a deductible to eliminate the
cost of processing small claims and by
applying depreciation to some items during
repair, insurers can provide collision and
comprehensive coverage at lower premiums.
If your vehicle is stolen and not recovered,
or is a total loss (“totaled”) following
an accident or other covered event, collision
and comprehensive coverage will pay you
the vehicle’s actual cash value just prior to
its being stolen or damaged; therefore,
you do not need to select limits for these coverages.
As your vehicle ages and its value declines,
so does the amount you will collect for a
total loss to your vehicle.
You may want to consider not buying collision
and comprehensive coverage on an older
vehicle. If your vehicle is financed or
leased, the lender or lessor generally
will require you to carry these coverages
with specified deductibles.
Coverage On Rental Vehicles
Collision and comprehensive coverage will
generally extend to a rental vehicle, but
the coverage is limited to the amount necessary
to repair or replace the vehicle. In the
event of an accident, some rental companies
charge for incidental damages, such as
loss-of-use, diminution-in-value or
administrative charges. These incidental
charges are usually not covered by
collision/comprehensive. To avoid these,
consider buying a damage waiver from the rental company.
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Auto
Insurance
Auto
Insurance