Most people who purchase collision coverage on their vehicles do so to protect their out-of-pocket costs if in an accident. But what many people don’t know is that their out-of-pocket costs can change depending on how the vehicle is damaged.
In the state of Michigan, there are three type of collision coverage to choose from. Below I will describe each of them in simple terms.
1. Broadform – it sounds the best, because it is the best. If you are the not at fault party in an accident, you don’t pay your deductible. Not a dime. This is important to many because if they don’t cause the accident they don’t want to pay their deductible costs. If you cause the accident; however, you pay.
2. Standard – (or regular or basic collision) means that you pay your deductible regardless of who the at fault party is. If you hit someone or something, you pay. If someone hits you, you pay.
3. Limited – the most affordable but provides the least amount of coverage. You only have coverage for your vehicle if you are not at fault. Additionally, your deductible does apply. If you cause the accident, there is no coverage for the vehicle at all.
As you can see, there can be big differences in out-of-pocket costs depending on how the accident happens. As a consumer, you need to be aware of these differences in order to make an educated decision on your insurance purchasing. That’s why it’s important to review those options with your advisor. Do you know which form of collision coverage you have? Contact Heather Mosher | firstname.lastname@example.org | 906.315.7235.