Edward Snaneh, Agent - Car SR22 Insurance Chicago Illinois
Collision and comprehensive insurance refers to the insurance coverage that offers protection in the event an insured suffers physical damage to his or her vehicle. The physical damage could be the result of a vehicle overturn or its collision with an object or because of any other reason (comprehensive). Depending on certain criteria like age, location, and vehicle value, the cost is about one-third of the total cost of the policy.
Definitions of Comprehensive and Collision
What is Comprehensive and Collision? Collision is normally defined as 'the upset of 'your covered vehicle or its impact with another auto or object.' This means there has to be, necessarily, an accidental, physical contact (impact) between your covered auto and another car, truck or object which results in the physical damage to your vehicle. If money is paid for damages you caused to others it would be paid under the provisions of the auto liability sections of your policy (if you were at fault).
Comprehensive & Collision are Optional, No Fault Coverages
You do not have to be at fault for your company to pay on collision and collision coverage. Comprehensive and Collision coverage is not dependent on fault. Neither comprehensive nor collision are compulsory coverage. You do not have to take out neither comprehensive nor collision coverage, and many people with older autos really don't take that coverage. As a rule of thumb, if your vehicle is older than seven years you should think twice before you buy the coverage. It is simply not worth the money if the company is likely to "total" the vehicle rather than pay for its repair.
If you have a loan on the vehicle your bank may require that you have comprehensive and collision coverage. In that case you must purchase it, or else the lienholder (bank) will buy it on your behalf and force you to pay for it. When your lienholder buys insurance for you, they normally buy comprehensive and collision only. Generally speaking no liability coverage is provided under comprehensive & collision policies issued through banks.
Most companies will allow you to take comprehensive without collision, but not the other way! It is vital to observe that collision and comprehensive are individually provided for and charged in your auto policy. In order for you to be covered by either coverage or both, the declarations page should indicate that you have selected these parts of coverage.
Deductibles Applicable to Comprehensive and Collision
Unlike liability insurance, the comprehensive and collision protection of the policy is subject to a deductible (the amount the policyholder pays before any claims are paid). Most deductibles are around $500 per claim, but the inured may select to have higher or lower limits. Higher deductibles mean lower premiums. Collision deductible changes have more effect on premiums than comprehensive deductible changes.
Paying For Damages Under Comprehensive and Collision
If your auto is destroyed or stolen, the insurance company has the right to select one of two methods in which to pay for your claim:
(1) They may decided to pay the amount necessary to fix the damaged auto or replace the property that was lost, or the cash value of the stolen or damaged property. Cash value refers to the worth of the property used (its current price in the marketplace less depreciation). Some people feel they have been dealt with unfairly based on the cash value method.
(2) Cash Out, or Totaling Vehicle. Under the provisions of the auto insurance policy, the insurance company may select to "cash you out" for the vehicle loss rather than repair the vehicle if this method will cost them less money. Most companies choose this method if they value of the repair is projected to be 80% or higher of the actual cash value of the vehicle.
Actual Cash Value of Your Vehicle
In determining the value of your destroyed vehicle insurance companies will look at the value of same year/ make/ model of your vehicle in open market of your area, then adjust it for over use (higher than average mileage, prior un repaired damages, etc.) Some people who were over charged when they purchased their overused vehicles will have hard time understanding why the company is not paying them what they paid for the vehicle. To make it simple, the worth of your car is not what you paid for it or what you owe on it to the bank.
You can always argue about the worth of your car in the even the insurance company wants to total your car. If your insurance company tells you they want to total your destroyed car, you do not have to just accept what the company says your car is valued. Look in the Kelly Blue Book, which should be online, and in your local newspapers at the classified ads to see the value of similar cars. Normally vehicles sold at used car dealerships have higher value (includes dealership profit, which is not part of the car value).
Additional Equipments Are Not Automatically Covered
Any additional equipment such as radios, TVs, computers, sound systems, special tires, etc., or any other device or equipment that have been added to the vehicle, and that are not included in the original make of the car, are not automatically covered. Special adds on coverage is necessary to have them covered under your auto policy. be sure to let them know. It can add to the value of your car when the insurance company adds up its total value.
Towing & Rental Are Not Automatically Covered.
Towing and rental are optional coverage in the Personal Auto Policy. Make sure that towing and rental coverage are included. Companies will schedule these coverages separately and will charge you for them. You have towing and rental if you paid for them. Check your policy declaration page for details.
Covering Autos You Do Not Own
Your collision policy will pay for claims for vehicles you damage while driving and you do not own. When you operate a vehicle you do not own and are in a crash or the car is stolen while in your possession, your collision coverage will pay benefits for the loss. It should be understood that this protection will not apply if you operate a vehicle on a regular basis, or a business vehicle.
This discussion of the collision and comprehensive coverage pertains the standard Personal Auto Policy. Some companies stick to the outlines of the standard auto policy, while other companies (mostly nonstandard) will have their own modified version of this discussion. Insureds are encouraged to read and understand their policies.