Guide to Collision Car Insurance Coverage

Unlike liability car insurance, collision coverage is not required by law. Collision coverage is an option available to car owners. It’s a coverage that insures the individual’s vehicle in case of an accident. A collision, in terms of car insurance, refers to being hit, hitting another vehicle or even hitting an object. When a car owner buys collision coverage, they are protected against any collision damages to their car, regardless of the cause.

Many people, especially those who own older cars, decline collision coverage when buying car insurance. However if the vehicle is new, it is wise to include collision coverage in an insurance policy. If the car was bought with a bank loan or funds from some other lending institution, most likely the individual is required to have collision insurance. This is the lender’s assurance that if the car is in an accident or damaged, it will be repaired or replaced. In a situation such as this, if the individual had liability car insurance only, and they caused the accident, they’d be in tremendous financial trouble. They would be required to continue paying for a vehicle that was damaged or possibly demolished. For this reason, lenders stipulate the collision coverage requirement.

Collision insurance is a car owner’s protection plan for their own vehicle. If the vehicle has a decent value, it is wise to include collision coverage in an insurance policy. Often car owners refuse collision coverage because of the high premiums. Hoping they’ll avoid an accident, they neglect to buy collision coverage. However, collision coverage doesn’t have to be outrageously expensive. One way to lower the premiums for collision coverage is to choose higher deductibles. If choosing an insurance policy that has a zero deductible, the car owner can expect to pay high premiums. If the car owner chooses collision coverage with a deductible for example $1500, they can save plenty on their premiums. If a car owner has an accident, whether it’s their fault or not, they would be responsible to pay $1500 towards the repairs. If the repairs cost only $2000, this might not seem like a good deal. However if the damages resulted in $10000 in repair costs, the deductible would seem insignificant. In the meantime the car owner would also have affordable collision coverage.

If a person has an older car, one that does not have a great retail value, buying collision coverage may not benefit them. Often when an older car is involved in an accident, the repairs cost more than the car is actually valued. In a situation such as this, the car owner would be paying collision coverage premiums, possibly for nothing. An example of this would be a car with a retail value of $1200 is involved in a car accident. An appraisal is done to determine the cost of the damages. To repair the car it would cost $2500. The car insurance companies will only pay repair fees up to the value of the car. The car owner then has a choice - does he/she pay the other $1300 to have their car repaired or forget about it and send the car to the scrap yard? In cases like this, most people would forget the repairs and look for another car.

Collision coverage is a great comfort for car owners who own expensive cars or who are paying a car loan at the bank.