WalletHub, Financial Company
An example of collision insurance is when your car insurance company pays for your vehicle repairs after you crash into another car or a stationary object like a tree. Another example of a situation covered by collision insurance is if you lose control of your car and it flips over. Collision insurance covers the actual cash value of your vehicle, minus your deductible, if it is damaged in an accident.
Collision Insurance Example 1: Your car is totaled.
Imagine that you cause an accident on the highway, your car is totaled in the crash, and your insurance company determines your car’s actual cash value is $18,000. If you have collision insurance with a $500 deductible, your insurer will pay out the remining value of your car, or $17,500.
Collision Insurance Example 2: Your car is damaged.
Let’s assume you run a stop sign and your brakes lock up, sending your car skidding into a telephone pole and causing damage totaling $4,000. With a $500 collision insurance deductible, your insurer will pay $3,500, usually directly to your mechanic.
To learn more, check out WalletHub’s guide to collision insurance.
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