Collision insurance is useful coverage for many car owners. It adds some protection that your basic policy might not include. Before you decide whether you buy this policy, read on to learn more about how this coverage works and whether you need it.
What Is Collision Insurance?
Collision insurance covers specific types of accidents. For example, a policy covers you if you have a collision with another vehicle or with an object, such as a wall or a fence. You also usually get coverage for certain single-car incidents, such as if your car rolls over.
This coverage only deals with vehicular damage. For example, your policy will pay for repairs—minus your deductible. It will also pay out the actual cash value of your car at the time of the accident if you total it in a qualifying collision.
However, this insurance doesn't give you any protection. For example, it won't cover your medical bills if you get hurt. It also won't help if your car is stolen or vandalized. You need other types of auto insurance coverage for these costs.
Who Needs Collision Insurance?
Some car owners make their own decisions to take out collision insurance. However, some people have to do this as a condition of their vehicle purchasing agreement.
For example, if you lease your car or still have payments to make on an auto financing loan, then your lease company or lender might require you to take out collision insurance. Here, the insurance covers the leasing company or lender's asset—the car. Your policy will restore your car after a qualifying collision. Or, it will pay for a cash-value replacement.
Even if you don't have to take out this coverage, it can be useful. Even minor collision damage can be expensive to fix. If your car is totaled in a collision, and you don't have appropriate coverage, then you have to pay for a replacement.
Think about whether you could afford to fix collision repairs or buy a new car. If you can, then this insurance isn't essential.
However, it is more important if you would struggle to pay for repairs or for a new vehicle if a collision wrecks your current car. Remember that comprehensive coverage doesn't typically include collision-based accidents, so this is the only way you can get this extra protection.
To create the right auto insurance policy coverage for your needs, talk to insurance professionals.