Collision insurance is automobile insurance that, regardless of fault, covers the repair or replacement of a vehicle in the case of an accident.
Collision insurance pays for the damage to your vehicle, as opposed to liability insurance which pays for the other driver’s property damage or bodily injury. Also, collision insurance is usually only required when you have a lien on the vehicle, meaning you are making payments and the bank still owns the vehicle. On the other hand, liability insurance is required for any car you own.
Collision insurance will most likely require you to pay a deductible before the car is repaired. The insurance company will usually give you a choice on how much you will have to pay in the event of an accident. However, the lower deductible, the higher your insurance payments are each month.
The accident may not be your fault but the other driver may disagree, likely resulting in legal proceedings that could go on for years. However, if you have collision coverage, your insurance company will repair the car and proceed with the claim on your behalf against the other driver’s insurance company.
This process is called subrogation. Even though your insurance company should be demanding enough money to pay you back for your deductible, they are not legally obligated to do so. In this event, you may want to proceed with a legal claim against the driver personally.
If other driver is clearly at fault but has no liability insurance, collision insurance will cover the damage to your car. Note that even if you have uninsured or underinsured motorist coverage, it may not cover all of the repairs.
If you get into a single vehicle accident (like hitting a tree.) Since there is no one else involved, collision insurance will cover the damage to your car.
It depends on the amount of collision insurance that is provided for in your policy. Companies use the following factors to determine the amount of the policy, as well as the premium you will pay for your collision coverage:
- The price of the car
- The durability of the car
- How accessible the parts are and whether the car is difficult to repair
- Whether the car is a type that is frequently stolen
When an accident occurs the amount paid out will also depend on the nature and extent of the damage, whether the mechanic used new or refurbished parts, etc. Additionally, an insurance company will never pay more than the car’s cash value (even if you think it is worth more.) A company is only legally obligated to pay the market value of the car before the accident, minus the salvage value of the damaged vehicle.
When you file a claim with an insurance company it is up to the insurance adjuster whether your claim will be approved or denied. Obviously, it is in the insurance company’s best interest to either deny your claim or pay the least amount possible. There are often hidden provisions in the policy that will an enable an adjuster to deny your claim.
Most states do not allow an individual to sue an insurance company directly unless they denied it in bad faith. The rules for bad faith are complicated. However, as explained above you can also sue the other driver personally for the damage. Whether you have a case against the insurance company for bad faith or the other driver, an experienced personal injury lawyer can assist you in making sure your rights are protected.