Limited collision is only available in the state of Michigan. One of the main factors regarding Michigan’s no fault laws is that your policy covers physical damage to your vehicle even if the accident is not your fault. If you have not purchased collision coverage, the most you can receive is $1000 from the at-fault person’s car insurance policy.
When Does Limited Collision Apply?
Limited collision protects against damage to your vehicle caused by another driver in a separate vehicle. Limited collision does not cover against physical damage to your vehicle when the person driving your vehicle is at-fault.
Limited Collision Applies: For example, you are rear-ended at a stop sign. Damage to your rear bumper and exhaust total close to $2500. Since you purchased limited collision and are not at-fault, your car insurance policy will cover the repairs to your vehicle.
No Coverage Applies: You hit a patch of ice and hit a guard rail. Damage to your vehicle totals $1500. When you go to file a claim you find out you have only purchased limited collision. Sliding on ice and hitting a guard rail is considered an at-fault accident and limited collision will not cover the repairs. You will have to fix the vehicle without the help of your car insurance.
Does a Deductible Apply?
Limited collision is usually sold with a zero deductible. So if damage does occur due to someone else’s fault, your vehicle will be repaired without any cash coming out of your pocket. Check your car insurance policy to verify your deductible.
Who Should Consider Limited Collision Coverage?
Limited collision is a good option for people who do not have a loan on their vehicle. However, the vehicle still holds a decent value upwards of $5000. It offers you protection against other’s negligence, but you are self insuring against your own mistakes. Consider your past driving record to determine your potential for possible loss. Limited collision can save you a decent amount of money on insurance when compared with broad or standard collision coverage.