Disadvantages Of Using Collision Coverage For Car Accident Damages

If you have damaged your car in an accident, you may be tempted to use your collision coverage to fix the car instead of pursuing a car accident claim against the at-fault driver. Unfortunately, this would be a mistake for the following reasons:

Your Policy Limits Apply

A collision coverage policy has a dollar limit on how much you can collect from the insurance company in case your car is damaged in a collision. Therefore, you will not be able to collect damages in excess of this limit even if your actual damages exceed your policy limit multiple times. For example, if your collision coverage limit is $5, 000, then this is what you will get even if the damage actually requires $10,000 to repair.

It gets even worse if some of your personal items, such as laptops and bags, were also damaged in the crash. This is because personal items typically have lower coverage limits form car insurers. This is different from pursuing a third party claim where your recovery is guided by the liability coverage limits of the other motorist, and liability limits are always way higher than collision coverage limits. In fact, even if your damages exceed the liability coverage limits, you can go after their personal property to make up the difference.  Also, the third party claim will not make any distinction between your damaged personal items and car; you will be compensated for all of them.

You Have to Pay a Deductible

Another problem with making a collision coverage claim is that you have to pay the deductible. The deductible is the amount you have to pay out of your pocket if your car is damaged in an accident. It will be even more unfortunate for you if you had raised your deductible to the highest amount possible to enjoy low insurance premiums.

It May Affect Your Future Auto Insurance Rates

Lastly, opting for a collision coverage claim may have future ramifications for your auto insurance. This is because your claims history is one of the things auto insurance companies consider when evaluating your rates. The more claims you have in your insurance history, the more you will be viewed as a risky driver, and your rates will go up accordingly.

As you can see, using your own coverage should be the last option. If your reason for avoiding a car accident lawsuit is because it sounds complicated, then the best alternative (to using your own insurance coverage) is to let a car accident lawyer handle the claim on your behalf.

Contact professionals like Walsh Fewkes Sterba for more information.