Insurance Blog

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Property damage insurance is liability insurance for claims brought against a person who causes damage to another's property, as by an automobile accident.

This includes not only the labor and parts costs associated with car repair, but also replacement for valuables inside the car that were destroyed or even for repairs to stationary objects you may hit like a neighbor's tree.

Some states require you to purchase at least a minimal amount of property damage liability coverage around $5000. However it is recommended to purchase higher coverage amount. Because if for example Mr. X has a $5000 property damage insurance policy and his car hit another car and the cost of repairs goes over the threshold of $5000, let's say the tolal cost of repair is $10,000. He would still need to pay $5,000 out of his own pocket.

Not only is property damage insurance a good idea, but it's a safe bet, considering the cost of replacing or repairing personal property.

collision coverage - insurance coverage that cover for the repair or replacement of the policy owner's car in the event of an accident, no matter who caused the accident. Collision coverage requires the payment of a deductible when a claim is made and is required for financing a car.

collision coverage is optional, but may be important to include it in your policy.

If you cause the accident you can't collect for damage to your car from the other driver. Collision coverage will pay for the damage, even if an accident is your fault.

The amount of collision coverage your policy provides and the cost of premiums will depend on the value of your car. Premiums are much higher for vehicles that are expensive, accident-prone, easily damaged, or hard to repair.

The insurance company is only obligated to pay only up to the car's cash value (Car Market Value before the accident - Salvage Value of the damaged car).

When to drop collision coverage?

If your premiums plus deductible are equal or more that the value of your vehicle, you can drop the coverage.

If you have a $1,000 collision deductible on a vehicle that's worth $1,000, it becomes useless since it's the total amount of your car.

Or, if your collision premium is $300 for a six-month policy term, you're paying $600 per year to insure your vehicle against damage that may never happen and you still have to pay the deductible (out of your own pocket) for example $500 that would make a total of $1,100 which is more than the value of your vehicle.

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Here is a nice Infographic guide from Bankrate.com on a how much is enough auto insurance.