Collision Coverage - Useful Or Ignore It?

author image Monday 09 February 2015, 11:52 AM Car-Finance

If you have ever been to a company for getting car insurance in India, then your agent would have enquired about whether you want to purchase collision coverage or not. Most of the people are not aware of collision coverage when they go for car insurance in India. Collision coverage, in short, covers damage to your car in situations like collision with another vehicle or object.

Collision coverage
Collision coverage

Though, many claim that they’ll never get involved in any accident, research convey a different story. Also, since it is better to be prepared for the worst, and thus collision coverage becomes a useful aid. Sometimes, your collision coverage can also cover the damage caused due to situations coming under comprehensive coverage. This is why; some insurance companies include extensive coverage in the policy for collision coverage.

One thing to keep in mind is that collision coverage will cover the damage to your car only up to the limits you have selected, provided that the total damage price doesn’t exceed the cost of your vehicle at that time in the market. In case the coverage exceeds the amount, the insurance company can either replace the model, or it can declare it as the total loss. This depends on your insurer. Another factor that decides the coverage limit is your deductible. Higher deductible means lower premium amount. Car insurance, including collision coverage, can come to your help in mainly three situations:

  • It covers the damage caused because of an accident. In this case, the insurer will evaluate the total damage amount and if it is within the limit of your coverage or the price of your vehicle (whichever is lower), then collision coverage will pay for the damage caused.

  • Collision coverage also covers the damage caused to your vehicle because of an accident caused by someone else. In this case, the insurer will deduct the loss amount from the vehicle insurance of the party which caused the damage.

  • Collision coverage, in some cases, can also cover the damage that rightfully comes to comprehensive coverage. But, as mentioned above, it depends on your insurer. It is always beneficial to have both collision coverage and comprehensive coverage included in your vehicle insurance policy.

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