Frequently Asked Questions - Pros And Cons Of Collision Insurance

Collision Insurance is the type of insurance that will cover damages to your own vehicle after an accident.  In the state of Florida, it is considered optional coverage insurance, unless, you lease or finance your car, then it is typically required by the financial lender.

Why should you get collision coverage?

Pros 

• If you are involved in a car accident, collision insurance will cover to get your vehicle fix.
• If you are in a single-car accident, it will cover your vehicle and any other object you hit such as fence, house, utility poles, lamp posts, tree, mailbox, guard rail, and street signs.
• You are covered regardless of who is at fault for the accident.
• This type of insurance will cover you if you are in a hit and run.
• It will cover you if you are in a rollover accident.
• It will also cover you if another driver hits your car and he/she does not have enough insurance to pay for the property damage.
• It covers pothole damage.
• Collision coverage can be expensive, but you can save on premiums by choosing a $500 or higher deductible.
• Is not required by law.
• Peace of mind for extra coverage.

On the other hand, below are some reasons why maybe you should not get collision coverage:

Cons

• It cost more money.
• Collision insurance costs a lot more than comprehensive insurance coverage since collision claims are more common.
• It does not cover theft, fire, falling objects, vandalism.
• It does not cover hail, floodwaters, wind, tornado, or hurricane damage.
• It does not cover wear and tear, mechanical failure, electrical failure, custom equipment.
• It will not cover personal items damaged in or stolen out of your vehicle. If that happens, you can make a claim under your homeowners or renter’s insurance.
• Some financial lenders will require you to get this type of insurance if you finance or lease a car.
• Some insurance companies will have you buy collision insurance and comprehensive insurance coverage together. Therefore, you cannot just buy one coverage without the other.  You will have to pay for both collision and comprehensive insurance.
• If the value of your vehicle is low, collision insurance, might not be worth it. For instance, if your vehicle is worth less than $1,000.00 then paying $1,000.00 deductible is not worth it as you would pay less to fix your vehicle.  In this instance, you should not put a claim for collision insurance since your rate might increase.
• Collision follows the car, not the driver. For example, if you lend your car to someone, and that person has an accident, your car insurance policy will be used and most likely will affect your future insurance rates.

On the other hand, comprehensive insurance is the type of insurance coverage that helps pay to replace or repair your vehicle if it is stolen or damaged in an incident that is not a collision.  Comprehensive coverage generally falls under “acts of God or nature,” or things that are typically out of your control when driving.  For example, a spooked deer, a heavy hailstorm, or even carjacking, vandalism, glass damage, or any object falling off a vehicle are paid under comprehensive insurance coverage.

For example, let’s consider two hypothetical events: First, a heavy telephone pole was blown down and fell on your vehicle, and second, you swerved to avoid a falling tree and wound up crashing into a guardrail.  In the first event, you could not control when or why a tree fell on your car. This kind of accident would get reimbursed under your comprehensive policy. In the second situation, you were driving the car and ultimately swerved into the guardrail. This makes it a collision, and collision insurance pays for the damages.

If you do not carry collision coverage and you are at fault in an auto accident, collision coverage is the only way to make a car insurance company pay.  Unfortunately, without collision coverage, you will have to pay out of pocket for the property damage of your vehicle or to even replace your vehicle. If you put a claim with your insurance company, under your collision coverage, you will have to pay your deductible and then your coverage will pay the balance for the repairs or for the total loss of your vehicle.

Moreover, it is also important that you know that most insurance companies will pay for your vehicle by using the Actual Cash Value (ACV) of the vehicle and not the Replacement Cost Value (RCV).  What does this mean?  Actual Cash Value is used by insurance companies to determine the value of the insured property to then determine the amount the insurance company will pay in the event of a loss.  By definition, ACV is calculated one of three ways: “(1) the cost to repair or replace the damaged property, minus depreciation, (2) the damaged property’s “fair market value”, or (3) using the “broad evidence rule,” which calls for considering all relevant evidence of the value of the damaged property.  On the other hand, Replacement Cost Value (RCV) is used by insurance companies to guarantee a policyholder will receive the full amount necessary to replace covered damaged items “like” kind or quality.

Also, it is important to know when should you get rid of collision insurance coverage?  Even if it is worth it now, you should always re-evaluate your coverage as your car ages.  In fact, once the value of your car has diminished or depreciated, you should drop collision insurance from your auto insurance policy.  For instance, if the cost of your collision coverage is 10% or more of the value of your car, then you should probably drop collision coverage.   If you lease or finance your vehicle, you will have no choice but to carry collision coverage.  However, if you own your vehicle, collision insurance is usually optional.

If you have been injured in an auto accident and your insurance is not providing you coverage as specified under your policy, speak to an experienced Central Florida personal injury and car accident lawyer at Trial Pro.  Call us at Trial Pro, P.A at-1-800-Trial Pro.