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When choosing auto insurance there are several options to keep in mind when trying to create a policy that best suits your needs. Everyone knows that in almost all states, in order to legally drive a vehicle, you must have at least a minimum amount of 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 better. For example, in the state of New Mexico, if you were to lease a Cadillac, the company responsible for the lease will 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 choice for your situation.
The one offering the least amount of confrontation would be called a “limited” option. If you choose this option and you rear-end another car that was at fault, your limited policy will not pay out. If you ended up in the rear, making it the other person’s fault, you would pay your chosen deductible, and then the insurance company would pay the rest. So, if you are better than 50 percent responsible for the collision and you have limited collision coverage, you foot the bill.
The middle of the road collision option is called the “standard” option. In this instance, if you broadside another car or they side-swipe you, you will be responsible for your chosen deductible, anywhere from $250 to $1,000. Basically, with the standard option, what you pay is the same regardless of who is in the accident. Some states offer a zero deductible option, but the premium rates will be significantly higher. The standard bump option is chosen by most average drivers.
The highest and most expensive bump option is called the “Broad Term” option. In this instance, if you are responsible for the collision—or at least better than 50% at fault—you will be responsible for your deductible and the insurance company will cover the rest. if you are No The collision is your fault and you have comprehensive term collision coverage, you pay nothing. The insurance company will pay 100% of everything for you.
Also note that the insurance company is only responsible for covering damages up to the value of the car. So, if you really do get stuck in a huge pile-up and your car is crushed and the repairs will cost more than its actual value, it will be declared totaled – food for thought.
Therefore, shop carefully for your auto insurance policy, choose your options wisely, be a safe driver, and ensure that you are covered in the best way that your budget allows.
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