What is Collision Coverage?
Collision coverage will pay for the repairs to your own vehicle if you are the one who is at fault in the accident. (Ideally, if the other party is at fault in the accident, their property damage liability insurance will pay for the repairs to your car.) Collision coverage is usually the most expensive type of auto insurance. Before choosing this kind of coverage, assess the value of your car to make sure it is worth the amount you will be paying in premiums. The insurance company will usually give you only the actual cash value of your car and not the amount that you will have to spend to replace your car. If you have an older car that does not have a very high actual value, it will probably not be worth it for you to carry this kind of coverage.
What Is Comprehensive Coverage?
Comprehensive coverage pays for damage to your car that was caused by events other than a car accident. Covered events can include theft, fire, vandalism, natural disasters -- even hitting a deer. Comprehensive coverage, like collision coverage, usually insures only the actual value of your car and not the replacement value. Before choosing this kind of coverage, check the value of your car. If your car has an extremely low value, paying the high premiums of comprehensive coverage may not be the most fiscally responsible thing to do. You'd be better off taking that money and putting it into a savings account or mutual fund in case of car problems.
What Is No-Fault Automobile Insurance?
About half the states have some form of no-fault law that requires drivers to carry insurance that will pay for their medical bills and lost wages -- up to certain dollar amounts -- regardless of who was at fault in an accident. The intent of no-fault laws is to eliminate injury liability claims and lawsuits in small accidents. The advantage of no-fault insurance is prompt payment of medical bills and lost wages without any arguments about who caused the accident. But most no-fault insurance -- which is often referred to in policies as Personal Injury Protection (PIP) -- provides extremely limited coverage:
- No-fault pays benefits for medical bills and lost income only. It provides no compensation for pain, suffering, emotional distress, inconvenience or lost opportunities.
- No-fault coverage does not pay for medical bills and lost income higher than the PIP limits of each person's policy. PIP benefits often fail to reimburse fully for medical bills and lost income.
- No-fault often does not apply to vehicle damage; those claims are paid under the liability insurance of the person at fault, or by your own collision insurance if you carry it.
To find out whether your state is a no-fault state, you can check with your state department of insurance, or speak with your insurance agent for additional details about no-fault insurance.
When No-Fault Benefits Aren't Enough
All no-fault laws permit an injured driver to file a liability claim, and lawsuit if necessary, against another driver who was at fault in an accident. The liability claim permits an injured driver to obtain compensation for medical and income losses above what the PIP benefits have paid, as well as compensation for pain, suffering and other general damages.
Whether and when you can file a liability claim for further damages against the person at fault in your accident depends on the specifics of the no-fault law in your state. Some states have "add-on" no-fault laws that put no restrictions on your right to file a liability claim in addition to your PIP claim. In these states, you can always file a liability claim against the person at fault for all damages in excess of your PIP benefits.
Other no-fault states have different types of thresholds that an injured person must reach before being permitted to file a claim for full compensation against those at fault for an accident. Some states have a monetary threshold only, some a serious injury threshold only, and still others have both. States with both requirements permit a liability claim if an injured person meets either one.
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
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