One of the most important auto insurance coverages includes policies for physical damages for the insured. This part of the coverage protects the insured from damages received because of an accident or 3rd party theft, fire or animals. There are 2 main types of Physical Damage coverages.
Comprehensive Coverage protects the insured’s vehicle from events that may happen separately from collision. These events include theft, floods, fire or damages caused by animals. It can also provide coverage for a vehicle that may be driven in special circumstances. If this coverage is needed, the insured receives money to pay for repairing the vehicle, less the deductible amount chosen on the policy.
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While higher deductibles keep premiums low, the insured may end up paying more for any needed repairs. This type of policy is not required by the state but it does provide security from leases or loans. Applicable vehicles are typically those that are financed or leased, or a purchased new car in mint condition. Older vehicles do not need this coverage, nor should it be purchased.
There is also Collision Coverage that is used to protect the insured’s vehicle in case of collision with another vehicle or an object. The cost of repairing the damage is covered less the amount of the chosen deductible. In order to keep a premium low in cost, it’s advised to choose a high deductible amount. As with the Comprehensive Coverage, older vehicles don’t need this type of coverage.
The coverage is limited only to how much the vehicle is worth so an older one wouldn’t need it. This is good coverage for financed or leased cars as well as for any new vehicles in perfect condition. While the state doesn’t require this coverage, it may be required to go along with leases or loans.
When trying to decide how much of a deductible to choose, you should know that this refers to the amount of money the insured agrees to pay out of pocket in case of an accident. A claim is paid less the amount of the deductible. So, choose your deductible wisely. If you choose a low deductible, your premium will be much higher than if you choose a higher deductible.