Featured News 2018 Why You Should Invest in Collision Insurance

Why You Should Invest in Collision Insurance

Car accidents happen all the time. In the U.S., vehicles crash into each other every 5 seconds. But most drivers don't know those figures—most Americans just have insurance because it's the law. No one really wantsto pay for insurance, even if we recognize how necessary it is when accidents happen. Many of us would be hard-pressed to explain exactly what type of insurance we pay for every month.

Consider that—we spend hundreds of dollars every month on a product we know very little about. We just hope we'll never use it.

Shouldn't we be more informed about what kind of insurance we have?

The 7 Deadly Insurance Types

That's what today's blog is all about.

There are seven different kinds of insurance:
  • Liability

    Liability insurance is the most basic type of coverage and is required by law. It covers vehicle damage, medical payments, as well as property damage—up to the policy limit.

  • Comprehensive

    Comprehensive coverage insurance covers theft, environmental damage, and animal accidents. Comprehensive policies are more costly, so measure the value of your vehicle against the price of the policy to assess if the price of coverage is viable. If a person does not choose to purchase this coverage, an insurance company will not handle the claim should any other catastrophe other than a car accident occur.

  • Uninsured motorist protection

    All drivers are legally responsible to be insured, but there's no guarantee that your fellow drivers are obeying the law. Uninsured motorist coverage shields you from car collision losses caused by a driver who doesn't have insurance to pay for them. Instead of leaving you on the hook for the damage caused by another person, UIM insurance covers property damage, medical costs, and whatever else arises from the accident.

  • Personal-injury protection or PIP insurance

    Medical or personal injury coverage pays for the medical injuries sustained in a car accident, no matter whose fault it is.

  • No-fault insurance

    No-fault insurance is insurance that covers the damage no matter who is at fault for causing the accident. Policies are usually designed to cover both personal injury and property damage. As you can imagine, no-fault insurance saves policyholders (and insurers) a lot of time spent on investigating accidents. When fault isn't an issue, then people can just get the money they need. However, these policies are normally expensive. It is only available in 12 states.

  • Gap insurance

    Gap insurance covers the "gap" between the value of the vehicle and the amount you still owe on the vehicle. If your new car gets into an accident that totals it, the insurance company may pay out less than what you still owe to the dealership. Gap insurance covers the difference, so you're not left making car payments for months on a vehicle that's been totaled. It's best for expensive vehicles that are still brand-new.

  • Collision

    The last policy is possibly the most valuable for commuters: collision insurance covers the damage of your car should you get in an accident. If your car is totaled, your insurer will pay the value of your vehicle. If you have a liability policy, you are responsible for paying any damage your vehicle may have incurred if the accident was your fault. Collision insurance ensures that your car is paid for—regardless of what caused the accident.

Should I Purchase Collision Insurance?

Buying a car is an investment—though vehicles lose their value quickly, a vehicle that is two or three years old is still an asset. If you purchase collision insurance, the money you put into the car will be kept safe. If your car is totaled, a collision policy pays for a new car. Collision insurance also covers you if the car accident was your fault. Since everybody makes mistakes, it is an excellent policy to consider purchasing.

Here are four factors to consider when purchasing collision insurance:
  • The value of your car
  • The damage of an average accident
  • Legal aid
  • Coverage to rent a replacement car

Additionally, a collision policy can give you peace of mind if an accident you were involved in has an "indeterminant fault" status. If this is the case, in a procedure referred to as subrogation, the insurance company will legally take care of the claim. If they win, you'll receive the monetary value awarded to pay for your car repairs. Another benefit through collision policy is that rental cars may also be covered—with the exclusion of business purposes. Therefore, if you only have basic coverage, you may want to rethink adding collision insurance. You may need it one day.

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