Auto Insurance Coverage – Facts About Collision Coverage

Collision coverage is not available if you finance your vehicle. The lienholder will ask you to show proof that your vehicle has collision coverage. Your lienholder will require you to show proof of collision coverage. If you fail to do so, they can place collision coverage on your vehicle and charge you whatever rate they offer. It is worth your time to compare coverage options and find the most affordable.

There are many nuances to collision coverage that you might not be aware of. These nuances are often not discussed with you when buying auto insurance. The following are some common misunderstandings and issues regarding collision coverage:

  • You can use replacement parts to fix your car after an accident

There is a common misconception that your insurance company must use OEM (Original Equipment Manufacturer) parts when repairing your vehicle. If your front bumper needs to be replaced and you own a Toyota, it is likely that a new Toyota bumper will be used. This is not usually the case.

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Your policy obligates your insurance company to restore your vehicle to its pre-accident state in the event of an accident. Most insurance policies allow for alternative parts to be used if it is more economical. This includes LKQ (Like Kind & Quality) and used parts, as well as Remanufactured, Refurbished or Aftermarket parts. A new bumper for your vehicle that is not manufactured by Toyota, but by another company, would be an example of an aftermarket component.

This is often an issue for insureds, according to my experience as a claims adjuster as well as a claims manager. Many people claim they don’t want any used parts or non Toyota parts on their vehicle. Consider this:

  • A 2007 Toyota Camry needs a front bumper replacement because of an accident. Would putting a new bumper on the Camry be a way to restore it to pre-accident condition. It’s not. A brand-new bumper could actually improve your vehicle, as it would have a new bumper on a 4-year-old car.

Your insurance company must be aware of fit & finish. This means that if an aftermarket bumper is used, it must fit the vehicle as well as not alter your vehicle’s appearance or finish. They will most likely use an OEM bumper if the replacement part is not compatible with fit and finish.

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You should also be aware of the following things regarding your policy and collision coverage.

  • There will be guidelines on how to use different parts in many policies. Your policy might state, for example, that OEM parts are only allowed if your vehicle has less than one year of age or less than 12,000 miles.
  • Insurance companies will accept OEM parts for repairs regardless of age. They will use an LKQ (used part) if a part isn’t available from the manufacturer. This is an excellent alternative because it will be an OEM part from a car exactly like yours so fit and finish shouldn’t be an issue. The cost of repairs will include painting or repair costs if necessary.

It is a good idea to review your current policy in order to understand how your insurer will handle collision damage to your vehicle. If you’re looking for auto insurance, it is a good idea to ask the agent or carrier about their policy regarding collision coverage and alternative parts. This will ensure that you are familiar with your policy and won’t have to make any claims if you need them.

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Marc Berry has over 8 years experience in auto insurance, having worked at 2 of the most respected and reputable insurance companies in the country.

Marc draws from his extensive experience in the field of auto insurance to provide great information. Marc has also gathered the top insurance companies in the country that are available to offer insurance. Complete one quick form to receive quotes from the top companies.