080: Collision & Comprehensive Coverage – Auto

080: Collision & Comprehensive Coverage – Auto

In the last episode we talked about Liability part of the policy, which provides coverage to you in case you are liable for damages to others for both suffering and damage to their property.

Today, let’s talk about protection for your vehicle. These are two parts of the policy that provide that protection:

  1. Collision – this part of the policy provides coverage to repair your vehicle if you hit another vehicle or an object.  It’s subject to deductible.
  2. Comprehensive – which is also known as “other than collision,” pays for losses to your vehicle if it suffers damage from something other than an accident. For example, if a tree falls on your car or you hit a deer while driving.

Now remember, both of these coverages are subject to deductible. For example you may have $500. That means, if the damages are $2500, you will have to pay $500 first and the rest will be covered by insurance.

My favorite tip for you: to keep your premium low, especially if you have a new car, increase your deductibles. I suggest $1000, but you need to make sure you have $1000 in your Emergency Fund.

 
Anna Sergunina
anna@adviceonly.net

I passionately believe that in order to live a life of fulfillment and joy, we must genuinely serve each other in any way possible. I found my mission in life to serve others via financial planning. Anna regularly writes about personal finance. Her work appears on Business Insider, Nasdaq, Nerdwallet, among others. Anna is the creator of Money Flow system.

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