Collision Coverage

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Collision coverage covers the cost of damage to your vehicle when it hits, or is hit by, another vehicle, or some other object. This coverage will pay the costs to fix your vehicle, minus the amount of the deductible you choose. If you want to have lower car insurance payments, select a higher deductible. Make sure that you feel comfortable paying the deductible amount out of pocket.

For some older automobiles, you might consider dropping this coverage, because coverage is normally limited to the cash value of your car. Collision car insurance coverage is limited to the terms and conditions contained in the policy. This type of auto insurance coverage is not generally required by states, but if you make payments on your car, the creditor usually requires it.

How Collision Coverage Works

The amount specified in your policy generally refers to your deductible, the cost of repairs that you will be responsible for paying. A higher deductible can substantially lower the cost of payments. But this should be balanced with your ability to handle higher out-of-pocket expenses. For example, if you set your deductible at $500 and your car sustains damages totaling $1,000, you will have to pay $500 and your insurance company will pay $500.

Who Should Buy Collision Auto Insurance Coverage?

You might benefit from buying collision coverage if your car is financed or leased. Banks for leasing agents generally require that you carry collision car insurance coverage. Also, if you have a relatively new vehicle, or one in excellent condition, you might want to carry it in case you have to replace or repair the vehicle, such as in the event of damage. If your car is older, or not in very good condition, the cost of this level of coverage might not be worthwhile.

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