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Michigan is a state with unique auto insurance requirements that can sometimes be confusing to navigate. Among these requirements, collision coverage is a significant aspect that drivers should understand in order to make informed decisions about their insurance policies. This blog post aims to provide a clear explanation of the three primary collision options available to Michigan drivers: Standard Collision, Broad Form Collision, and Limited Collision.
Standard Collision Coverage
Standard collision coverage is the most basic form of collision insurance available in Michigan. This coverage pays for damages to your vehicle regardless of fault, meaning that even if you are at fault for the accident, your insurance will cover the repair costs up to the actual cash value of your vehicle, minus your deductible. The deductible is the amount you must pay out-of-pocket before your insurance coverage kicks in.
For example, if your car is damaged in an accident and the repair costs are $5,000, and you have a $500 deductible, you would pay the $500, and your insurance company would cover the remaining $4,500.
Broad Form Collision Coverage
Broad form collision coverage is an enhanced version of collision insurance that provides additional benefits compared to standard collision insurance. With broad form collision coverage, your insurance company will pay for damages to your vehicle regardless of fault, and you are only responsible for paying the deductible if you are more than 50% at fault for the accident.
For example, if your car is damaged in an accident, and it is determined that you are 40% at fault for the accident, you would not have to pay your deductible. Your insurance company would cover the repair costs up to the actual cash value of your vehicle, minus any applicable depreciation.
Limited Collision Options
Limited collision coverage is another option available to Michigan drivers. With limited collision coverage, you are only covered if you are not at fault in a collision loss. Going back to the broad form collision example, if the situation was reversed and you rear-ended another car, you would be responsible for the entire cost of repairing your vehicle. Due to this coverage limitation, limited collision coverage is not acceptable to lenders if your car is financed.
Which Option Is Right for You?
Choosing between standard collision, broad form collision, and limited coverage ultimately depends on your personal preferences and financial situation. Broad form collision coverage may be a better option for those who want more comprehensive protection and are willing to pay a higher premium for it. Standard collision coverage may be a more cost-effective option for those who are willing to take on more financial responsibility in the event of an accident. Limited coverage is a more restrictive option that may not be suitable for everyone, especially if you have a financed vehicle.
Understanding the options available in Michigan auto insurance is crucial for making informed decisions about your coverage. Standard collision, broad form collision, and limited collision coverage each have their benefits and drawbacks, and the right choice for you will depend on your individual needs and circumstances. Be sure to review your insurance policy and speak with your insurance agent to ensure you have the coverage that best suits your needs.
