Most states require liability insurance only to protect others from any damage you may cause behind the wheel. However, liability minimums are not the only coverage you need. Leasing or financing a vehicle will require that you have full coverage, which includes comprehensive as well as collision coverage. Most insurance companies offer collision coverage as an additional coverage.
Although collision insurance can increase the cost of your auto insurance, you still get financial protection. This includes coverage in the event your car is involved in an accident. You will pay a deductible, instead of paying for all costs out-of-pocket in the event that your car is damaged by a covered claim. Is collision coverage worth the additional cost? Bankrate can help to give you a better understanding and help you make a decision.
What is collision car insurance?
What is collision coverage? Collision coverage is your car insurance that covers the cost of your vehicle being repaired or replaced in an accident. This coverage is particularly useful in cases of at-fault accidents, where your liability coverage would only cover the expenses of the other driver and their passengers.
In general, repairs to another party’s vehicle are covered by the property damages liability coverage. Even if you are not at fault, collision coverage may still be available to assist.
Your auto insurance may cover you for damages caused by another driver. This will protect you from out-of-pocket expenses while your insurance company claims reimbursement from the at-fault driver. This is useful in cases where the driver’s insurer takes too long to respond or if the at-fault driver doesn’t have sufficient or adequate coverage. Uninsured or underinsured motorist coverage may be available in certain cases. However, this is not always the case.
What does collision insurance cover?
Collision coverage, in short, is designed to protect your vehicle and pay for its repair or replacement in case it collides with another vehicle. Imagine that you hit a curb, causing damage to your bumper and tires. Collision insurance covers the damage caused by you. Even if you are at fault in an accident, collision insurance will pay for the repairs to your car.
Collision insurance also covers damage from the following:
- Accident with another vehicle
- Aiming at a fence, mailbox or tree
- Your car can be damaged if it crashes into road hazards like a guardrail or sign post.
What collision insurance doesn’t cover
Collision insurance doesn’t cover everything. These are some of the things that are not covered by collision insurance:
- Your car may be damaged by theft or vandalism
- Animals can cause damage to your vehicle
- Fire can cause damage to your vehicle
- Natural disasters or severe weather such as hail can cause damage.
Comprehensive insurance covers the non-covered perils.
Do I need collision car coverage?
Your lender may require that you have collision insurance if your vehicle is financed or leased until the loan is paid off or your vehicle is returned.
Even if you don’t owe any money on your car ask yourself how much it would be to replace it or repair it if it was damaged in an accident. Collision coverage can give you some peace of mind if you don’t think you have the funds to repair or purchase a new vehicle after a collision. If your car is older or has suffered significant damage, you may be able to skip collision coverage.
How can I buy collision coverage?
When you purchase a policy, most auto insurance companies will offer collision coverage. Collision coverage offers financial protection against vehicle damage, which is a benefit over liability-only insurance. Collision coverage covers repairs and replacement costs up to the actual cash value of your vehicle. This is the maximum amount your policy will cover for a covered claim. You would also be responsible financially for collision coverage.
If your car sustains $5,000 of damage under collision coverage, and you have a $1,000 deductable, your insurance company would likely pay $4,000 to cover your repair costs. However, this does not mean that you should write $1,000 to your insurer. Your insurer will usually subtract your deductible from any check it issues.
You can choose the collision deductible amount as a policyholder when you buy coverage. Your annual premium will be higher if your deductible is lower. Insurance experts recommend that you choose a amount that you can afford to pay out-of-pocket in the event of an accident.
Questions frequently asked
What is the difference between comprehensive and collision coverage?
Comprehensive coverage covers your car if your vehicle is damaged by hail, flooding, or another accident. Collision coverage pays for the cost of repairs to your car if your car is in an accident. This coverage also covers your vehicle if it is stolen or vandalized.
Do older cars need collision coverage?
Additional car insurance coverages can be purchased outside of the state’s minimum requirements, provided that there is no active loan or lease. To provide financial protection for their vehicles, some people choose full coverage. This includes comprehensive and collision coverages. Some drivers might not find collision coverage as beneficial because of their older vehicle’s depreciated value.
What happens if my car suffers severe damage?
Collision insurance will cover repairs to your vehicle from covered claims, unless the repair costs exceed the car’s actual value. Your car will be “totaled”, which means that your insurer will pay you the actual cash value of your car, less your deductible. Sites such as Kelly Blue Book can give you an estimate of the car’s value.