In Plain English
Posted on: Jun 03, 2015
We hear you: Understanding insurance can be complicated. But not when we break it down to the basics. For all you folks financing vehicles or with snazzy-ish rides, read on—you’ll probably want collision insurance, which covers you in the event of an accident.
You get a break when trying to understand this kind of insurance—collision insurance is just what it sounds like. It helps cover the cost in damages to your car when you have an accident, whether you’re colliding with another car or a ditch, courtesy of a slick road. It doesn’t matter if you’re at fault—thanks to collision insurance, the cost of repairs to your vehicle are covered, minus the deductible, which you pay. And if you’re not at fault, and your insurance company can recover the damage amount from the other driver’s insurance company, then they’ll reimburse you that deductible as well. Collision insurance also covers pothole damage (winning!). The same rule applies here: The higher the deductible, the lower your premium—aka monthly payment.
You might choose collision insurance if…
- You are financing (making payments on) a vehicle
- You drive a nice or nice-ish car, and/or don’t want to be responsible for paying for any accident damage done to your car out-of-pocket.
- You want to carry more than the bare-bones state minimum.
Do I need collision insurance?
On average, four car accidents will occur per person per lifetime. Those numbers are depressing, but luckily, collision insurance offers a wide range of protection to help you cover the cost of an accident. So, unless you have the means and desire to pay for any damages in full, collision coverage might be just what you need to stay stress-free. You will also need collision in most cases if you are financing or making payments on a vehicle until you pay off the car.
Does collision insurance cover uninsured motorists?
Damage caused by a driver with too little or no insurance may be covered by collision insurance depending on the specifics of the accident and the insurer you select. To clear any doubt, you may elect to carry uninsured motorist coverage.
Does collision insurance cover hit and runs?
You can often claim the losses from hit-and-run accidents under collision coverage although the claim may raise your rates in the future if you choose to switch to a new company. This is because your driving reports will show a claim that was paid out under collision which normally means a driver is at fault in the accident. The best way to avoid this is through uninsured motorist coverage.
Should I have collision insurance on an old car?
While a vehicle’s value depreciates greatly over time, the costs of parts and labor often don't plunge in the same way. Imagine if an accident were to happen and your current vehicle needed a major repair. If it wouldn’t be worth it to repair your old car—and you have the ability to/would rather replace it instead—than collision insurance may be unnecessary.
How much does collision insurance cost?The cost of collision insurance varies widely depending on a number of factors such as age, vehicle, and location. See quotes from hundreds of carriers in seconds at TheZebra.com.