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Maryland Insurance 101: Collision (Property Damage)

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Posted On 11.26.12 by in Auto Accidents

 

Collision is a provision in your automobile insurance policy that will pay to repair or replace the vehicle if it is damaged in an automobile accident.  Deciding whether to get collision on a vehicle is usually a cost-benefit analysis.  If the car is newer, or if the family needs that car and does not have the means to replace it on their own, collision is typically important.  If the car is older, then the insurance premiums may not be worth it, as compared to the car’s fair market value.

In an accident where the other driver was negligent, that driver’s insurance company should pay for the lesser of the repair cost or fair market value of your vehicle.  If the other insurance company admits responsibility for the accident early, then it will typically be taken care of very quickly.  If not, it may be easier to go through your insurance company’s collision policy.  If you do use your own insurance, you will likely pay a deductible (usually $250 to $500).  If the other insurance company later admits liability, you will get your deductible paid back.  If your insurance fights the other insurance company (they typically do this in arbitration) and wins, you will get your deductible back.

Most important to many of our clients, neither insurance nor an automobile accident lawsuit can recoup the replacement cost of the vehicle.  Under Maryland law, the insurance company only has to pay for the car’s fair market value.  If the vehicle is totaled, you are entitled to the value of the vehicle in its pre-accident condition.  Sometimes, this may not be enough to purchase a reliable replacement car.  Insurance companies and attorneys use several resources to decide fair market value, including NADA and Kelley Blue Book.

One more thing—people who are leasing a vehicle may have a unique problem if their car is totaled in a collision.  They may end up owing more on the car than the fair market value, which means they could end up owing a lot of money.  This makes it even harder to afford a replacement vehicle.  The financing company will typically offer gap insurance, which will pay the difference between what you owe and what the insurance company pays you for the car.  It is added protection to make sure you can meet your expenses after an accident. 

Contact Us

If you have questions about your property damage coverage after a Maryland automobile accident, contact our automobile accident lawyers at 1-800-776-4529, or send us some brief information online.  We’ll put our expertise to work for you right away.

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