Top Reasons To Buy Collision Insurance

For many drivers, purchasing collision insurance is a smart move.

 

About Collision Insurance

Liability insurance covers the cost of damages you may cause to others in an auto accident, but collision insurance is a type of physical damage protection that covers the cost of repairing your vehicle when the accident is determined to be your fault.

Collision insurance is not legally required as part of state financial responsibility laws. In order to obtain a drivers license or register your vehicle, you must simply prove that you are able to provide reimbursement for injuries or damages you may cause to another person’s property.

If you use an auto loan to purchase your vehicle, however, collision insurance is likely to be required. Because the car is being used as collateral for the loan, the lender wants to make sure its interests are protected in the event of an auto accident.

Collision insurance is often sold with comprehensive insurance, which covers damage to your car from other factors such as fire, flooding, theft, or vandalism. Together, these two types of car insurance are often referred to as full coverage insurance. A deductible is required, typically ranging from $100 to $1,500. The higher the deductible, the lower your monthly premiums will be. However, this means you will need to be able to come up with a larger amount of cash when making a claim on your auto policy.

 

Top 4 Reasons to Buy Collision Insurance

Budget conscious drivers may be tempted to skip collision insurance in favor of the minimum legal requirements for their state, but there are many good reasons why drivers should consider having this type of auto insurance.

1) You Drive a Newer Vehicle

Although cars depreciate rather quickly, a vehicle that is only a few years old still has a fair amount of value attached to it.

Even if you did not use a loan to purchase your car, you may want collision insurance in order to protect your investment. Collision coverage will reimburse you for the fair market value of your vehicle if you are in an accident and it is determined it would be more cost effective to replace your vehicle instead of making the needed repairs.

2) Everyone Makes Mistakes

The most important reason to purchase collision insurance is that it protects you in the event that an accident is determined to be your fault. Even if you're normally a very careful driver, everyone makes mistakes. Maybe you didn't see the stop sign or maybe you were a bit distracted after a long day at the office.

With collision insurance, you'll be able to get your vehicle repaired and get on with your life.

3) You'll Have a Legal Advocate

If liability for the accident is uncertain, you could be looking at lengthy legal proceedings to determine who is going to pay for the damages.

With collision insurance as part of your auto policy, your insurance company will take over your claim against the other driver through a process called subrogation. If they are successful in recovering the damages, you'll receive money to pay some or all of your insurance deductible.

4) You May Be Protected in a Rental Car

Many companies also extend their collision insurance to rental car coverage as long as you're not renting a vehicle to be driven for business purposes. If you’re covered by your regular car insurance, you will not need to purchase the expensive rental insurance the company may be offering. Depending upon how often you need to rent a car, being able to turn down the rental company’s collision damage waiver could result in a significant savings.