Collision Insurance

What is collision insurance' is a query that is asked by many people. The term collision insurance is quite generic in nature and there are many transport objects that are often covered under a policy of collision insurance. It is not necessary that a collision insurance should be used for just cars and smaller trucks. All transport vehicles, right from airplanes to ships can be covered with a collision insurance.

Collision Insurance: Definition

It is very easy to define collision insurance and as the name itself implies, it to be an insurance policy that covers the damage done to your vehicle as a result of a collision with another object or vehicle. A comprehensive collision insurance basically safeguards your car from almost all damages that occur during an accident. Though auto insurance companies often advertise their collision insurance only for cars used by common consumers, there are policies that are generated for bigger vehicles such as trucks and buses.

Collision Insurance: How does it Work?

The working procedure of the collision insurance is quite simple. All you need to do is apply for an insurance and wait for the company to send an audit team. Let us take the simplest example of an auto collision insurance. After the insurance company gets the application, it begins its quotation process. First an audit or survey team is sent to your house, where your car is surveyed. In such a scenario the survey team takes into consideration all the features of the car, such as the size and capacity of the engine, speed, age and make of the car and finally the availability of auto parts. The second thing that is taken into consideration by this team is your driving record. In such a scenario, drunk driving cases or accidents, might prove to be fatal. Next, based upon all this data, the company quotes a certain insurance policy. If you are willing to buy the quoted coverage, then the company will assess your current debt to income ratio and give you a premium price.

In cases of accidents or collisions, the insurance company compensates the policy holder with the amount that is required to restore or repair the vehicle. The single condition being that the accident should be a crash or a collision with another object. There are also collision insurance policies that provide a coverage in cases, where the damage has been inflicted on a stationary vehicle. It must be noted that a collision insurance policy does not cover the damage that has been inflicted upon another vehicle or property. Thus, if the policy holder gets sued after an accident, the company providing collision insurance does not contribute to compensate. Similarly, this policy does not provide compensations for health related expenditures that have occurred as a result of the collision. The scope and premium of this policy is quite low due to which it is affordable and one should always avail it.

When to Drop Collision Insurance?

Dropping a collision policy makes no sense. Though this policy is not compulsory, it should not be dropped. The reason why a vehicle must have collision insurance is simple, auto insurance compensations are never provided for in full, meaning that you would not have a 100% compensation for the accident, especially if the policy holder is at fault. However, the reimbursement of a collision insurance is such that it is provided even if the policy holder is at fault. Thus, the advantage is that the policy holder is able to repair his vehicle after the accident even if he has been at fault.

Collision insurance is, thus, a very effective policy that safeguards your vehicle at a relativity low premium cost. The positive point of having such an insurance policy is that you shall be able to repair your car in the least possible time.