COLLISION COVERAGE is  where  your insurance company pays for the repair of you car regardless of how it gets damaged (i.e. your drunk cousin runs the car into the lake). This type of coverage is almost always required when you finance your car (i.e you have to make monthly payments for a year or two or three). In most cases, if your car gets wrecked, you still  have to make  your monthly car payments. If you have COLLISION COVERAGE, your insurance company will either repair your car or pay you the market value for it whichever is cheaper. If you still owe money on the car, the money from your company will allow you  to pay off the note.  

 

Many people  with older cars or cars with lots of miles on them,  decide it is  not worth it  to buy collision coverage. For these people, they can collect the cost of  repairing their car from the person who caused  the accident (if that person can afford to pay or from that person's insurance company but the insurance company almost always pays so  little that  many people are highly dissatisfied).

 

A common misunderstanding is that if you report the accident to your company, your rates will go up even if the accident was clearly the other guys fault. This is a mistake. If the  accident is the  other person's fault, I recommend you get  your repairs done through your company because  they will pay for the repairs to  your car (or, as noted above, will  pay you the value of the car if it is a total loss) and then seek to  be reimbursed by the company for the guy who caused the accident.  Your company almost always gets their money back so you don't have to worry about your rates going up. Your company will  also be much easier to deal  with and much more responsive (i.e. faster) than dealing with the other guy's company.

 

The amount of  collision coverage is easy to determine; namely get enough to cover the cost of your car if it ever gets totaled. That way if it is totaled you get  enough money to replace it (and more than enough in cases where  the car is damaged but  not so much as to classify it as a "total" job). And get the tow  coverage (almost always  included  automatically but  check with your  agent to be safe)  and the rental car coverage (so you  can get a Mustang convertible and look good as you tool  around while your car is in the shop.) One caveat to the rental  car coverage; be sure to be  on the same page as your  company when it comes to  how much they will  allow daily for  rental car  coverage (usually  it is about $20/per day) and  as  to how long they think it is reasonable for you to have the car. Almost always this depends on how  long the mechanic is  going to take to repair your car (but people's  mechanics who  take too  long to fix the car usually wind up having to  argue with their company about who is going to pay for the  extra  car rental - and the companies  usually win so be sure to check in with your adjustor every few days while you are using a rental car to make sure they are ok with you continuing to use a rental car).

 

Ok, that is it for today. Be on the look out for my next posting where  I will recommend what  you should do if someone else hits you and it is their fault! (i.e. get  the contact information for them and their insurance company, get prompt medical attention and take lots  of pictures of  the cars, the area where  the accident happened, and  call  a lawyer  who is experienced in personal injury cases to get him  or her  on board early).