An individual purchased car for many reasons. They may have it as a gift, for pleasure, or fond of collecting vehicles. Cars are considered as an investment and a treasured item for every individual. If you have that first brand new car, there are many things that you want to do to protect your car and to maintain its beauty and function. One way of making sure that you will be taking care of your car especially during accidents is to get collision coverage. Collision coverage will cover the repair of your car during accidents. May it be a small dent or the car is totaled. Any type of collision coverage is subject to a deductible, this is the amount that the insured needs to pay before the insurance company will cover for the difference. If you have a deductible of $250 and the cost of the repair is $500 then the insured will need to pay first the $250 out of the insured’s pocket before the insurance company will cover for the rest.
Collision coverage is not mandatory. In the event that you have your car leased or financed, the financing company will require the insured to carry full coverage including collision coverage until the duration of the leasing term or until the car is paid off. In choosing the deductible for a leased or financed vehicle will depend on the deductible stipulated in the terms and condition of the loan. Some financed company will require insured to carry $250 or $500 deductible. As a borrower from the financing company, you don’t have any other option than to follow the deductible on your contract. Lienholders will ask insurance company to fax over or to send a copy of the policy showing the full coverage and the deductible. If the insured is not able to follow such condition by the financed company, there is a possibility that the loan will be pulled off. The insurance company will want to make sure that the financed or leased vehicle will be fully covered in any loss.
Collision coverage premium will vary on the type of car that you have. It depends on the year make and model. If the car is more than ten years old, you might want to keep it at liability coverage. There is a possibility that auto insurance premium is high if you are still going to have it insured with collision coverage.