What Is Collision Damage Waiver Insurance?
Insurance coverage is required by law for every driver, with variances from state to state. In most states, the amount of insurance coverage is mandated to a minimum of liability insurance but may include collision coverage. Collision insurance covers a driver when the vehicle is hit by another vehicle or an object causes damage to it.
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Definition
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Collision coverage is a shortened name for a collision damage waiver. This coverage insures the vehicle in a collision with other vehicles, buildings, people or even the road itself. This coverage only covers the current fair market value of the vehicle and does not provide for restoration of aftermarket vehicle enhancements or the value of any loan the driver may be paying.
Features
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Collision insurance covers the driver, whether or not he is at fault for the accident. It also provides for towing, storage and salvage if the car has been badly damaged. Generally, collision insurance will cover the cost of repairs to the vehicle or replacement if it is badly damaged, unless the repairs are due to mechanical failure as a result of improper maintenance.
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Full Coverage
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Insurance policies recognized as full coverage typically include collision insurance, which may be packaged with comprehensive coverage. Each of these types of coverage covers what the other does not. While collision covers the vehicle in an accident, comprehensive covers other types of damage that may occur outside of an accident. The two are often sold together but may be sold separately.
Enhancements
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A collision damage waiver is necessary in a collision with a vehicle where the driver does not have any insurance at all. For additional protection, collision insurance may be enhanced by uninsured motorist protection, which covers your vehicle if the other driver does not have insurance or if you are involved in a hit-and-run collision. Depending on the coverage, your insurance will cover the costs, even if you cannot obtain any information from the other driver.
Deductible
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A deductible is the amount that the policyholder pays before the insurance kicks in. For example, if the deductible is $500 and the damages are $2,000, the policyholder will have to pay the deductible before the insurance pays $1,500. Deductibles generally range from $250 to $1,000.
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References
- Photo Credit Crash on the street. German auto model 2007. image by Dariusz Kopestynski from Fotolia.com
