Common Insurance Terms: Collision Insurance // on Tuesday December 30, 2014
Your monthly vocab lesson in insurance terminology
Ever wonder what some of the terms on your insurance policy mean? If you're a first-time insurance buyer, or just not familiar with all of the insurance jargon, making sense of your insurance policy can be tough. Maybe the terms are memorable to you, but when asked to explain them, you're at a loss for words. That's why we're here, to help you make sense of insurance. Check out the Insurance Term of the Month below for your monthly dose of insurance vocab.
Collision Insurance col·li·sion in·sur·ance [kuhl-lizh-uh-n] [in-shoo r- uh ns, -shur-] noun Covers physical damage to the insured's automobile (other than that covered under comprehensive insurance) resulting from contact with another inanimate object.
So you've been in an accident? First question: who's at fault? The scenarios below will help illustrate why this matters.
You're in accident that is solely your fault. You knew you shouldn't have swerved to miss that banana peel… unlike in Mario Cart, they aren't actually slippery. Your collision insurance will reimburse you for the damage sustained to your vehicle. Luckily, no other vehicle was involved in the crash, but if one was, and the accident was your fault your liability insurance would then kick in to pay for the other vehicle's damages you caused.
You're in an accident and another driver involved is at fault. Your collision insurance doesn't cover your damage. Instead, that is paid from the other driver's policy.
You park your vehicle on the street and run into a nearby store. While you're gone, your car is vandalized, and to make matters worse, you notice your computer has been stolen from the back seat. While this likely caused some damage to your vehicle, and a tension headache, you are not covered by your collision insurance for vandalism or theft.
Source: A.M. Best Resource Glossary; Investopedia
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