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How to Use Collision Car Insurance

China iTech Ghana
Saturday, October 2, 2021 | views Last Updated 2021-10-02T18:58:46Z
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 Using collision car insurance is the same as using most other car insurance policies. You purchase a policy from the insurer with a set deductible amount and set monthly premiums. The deductible amount is the amount of money you must pay before any insurance kicks in. Monthly premiums are the payments you make each month for the insurance coverage. 


When your car is damaged in a collision, you file a claim with your insurance company, documenting the accident and the damage to your car. Depending on your policy, they may send an adjuster to estimate the cost of the damage. They may also require you to take your car to one of their contracted repair shops. They’ll pay for the repair, less your deductible. 


So, if your deductible is $500 and the damage is $2,000, you pay $500 and the insurance company pays $1,500. If that doesn’t seem like a great deal, consider this: If your car is damaged beyond repair, the insurance company will pay you the car's value (minus your deductible). That money will go a long way toward paying off the loan on your car or buying you a new one.


Who Needs Collision Insurance Coverage?

In most states, collision car insurance is optional coverage. Strictly speaking, you don’t have to buy it. However, if you lease or finance your car, your leasing company or lender will likely require that you have collision car insurance. That’s because while you're leasing or financing a car, you don’t technically own it (you never own a leased car, and when financing a car, you don’t own it until you pay off the loan). Leasing and car loan companies require collision insurance to protect their car while you drive it.


Collision insurance on a financed or leased car protects you as well. Let’s say you owe $20,000 on your car, and it’s damaged beyond repair in a collision. Without collision insurance, you’d have to pay the entire $20,000 you owe to the finance company. With collision insurance, you wouldn’t have to come up with the total amount.

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