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Auto Insurance: Understanding the Different Types of Collision Insurance

When choosing auto insurance, there are several options to consider when trying to create a policy that is best suited to your needs. Everyone knows that in almost every state, to legally drive a vehicle, you must have at least liability coverage on your car, but what about other types of insurance? Well, one of the most important options is your collision coverage.

If you finance a vehicle for purchase or lease, your lender will insist that you have collision coverage, and the more the merrier. For example, in the state of New Mexico, if you were to rent a Cadillac, the company responsible for the rental will likely insist that you purchase the maximum collision coverage available. There are levels of collision coverage that you should be familiar with in order to make the right decision for your situation.

The least amount of collision offered would be called the “limited” option. If you choose this option and rear-end another car, which would be your fault, your limited policy would pay nothing. If you were to be in a rear-end collision, which would make the other person at fault, you would pay your chosen deductible and then the insurance company would pay the rest. So if you are more than 50 percent liable for a collision and have limited collision coverage, you pay the bill.

The collision option in the middle of the road is called the “Standard” option. In this case, if you abuse another car or hit it sideways, you will be responsible for your chosen deductible, which ranges from $ 250 to $ 1000. Basically, with the Standard option, what you pay is the same no matter who it is. blame for the accident. Some states offer a zero deductible option, but the premium rates would be considerably higher. The standard collision option is the one most commonly chosen by the average driver.

The highest and most expensive collision option is called the “Broad Term” option. In this case, if you are responsible for the collision, or at least more than 50% at fault, you will be responsible for your deductible and the insurance company will cover the rest. If you are no you are at fault for the collision and you have comprehensive term collision coverage, you pay nothing. The insurance company would pay everything for you 100%.

Also note that the insurance company is only responsible for covering damages up to the value of the car. So if you really get into a big crash and your car is crushed and it will cost more than its actual value to repair, it will be declared totaled, just something to think about.

So, shop around for your auto insurance policy, choose your options wisely, be a safe driver, and make sure you’re covered to the best of your budget.

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