What is other than collision coverage?

Yes, you need collision insurance if your car is leased or financed. Collision insurance is not required by any state laws, but most lessors and lenders require drivers to have it until the car is paid off. Even if you’re not required to have collision insurance, you should still purchase it if you cannot afford to pay for damage to your vehicle after an accident.… read full answer

Why You Need Collision Insurance

Collision insurance pays to repair or replace your car after an accident, regardless of who is at fault. If you cause an accident, collision coverage is the only way to have your repair costs covered by insurance. Even if you are not at fault for an accident, you can file a collision claim to pay for your repairs while you wait for a final determination of fault. Your insurance company will then recoup your costs from the other driver’s liability insurance.

Factors to Consider When Deciding if You Need Collision Insurance

• Price of coverage
• Car value
• Likelihood of an at-fault accident
• Cost of repairs

When to Consider Dropping Collision Insurance

A general rule of thumb is that if your collision insurance premium is more than 10% of your car’s value, you can consider dropping the coverage. However, this is just a general guideline. If you can’t afford to pay out of pocket to repair or replace your car after an accident, then you should continue to carry collision insurance. You should also keep it if your car is particularly valuable or you live in a high-traffic area where you are more likely to get into an accident.

A collision insurance deductible is the amount of money that a driver must pay out-of-pocket when filing a collision insurance claim. Collision insurance pays to repair or replace a car damaged in an accident, and a driver must pay their collision deductible before their insurance company will cover the remaining costs.… read full answer

Collision Deductible Example

Say you are at fault in an accident that causes $10,000 in damage and you have a collision deductible of $1,000. You are responsible for covering your $1,000 collision deductible out-of-pocket in order for your insurance company to pay the remaining $9,000.

Collision Deductible Amounts

Collision deductibles typically range from $100 to $1,000, and you select your deductible amount when you purchase your policy. The higher your deductible, the cheaper your premium will be. Although it’s tempting to get a higher deductible in order to pay less upfront, you should only choose a deductible that you can afford to pay if your car is suddenly damaged in an accident.

If you have no collision insurance, your vehicle will have no coverage under your car insurance policy if you cause an accident. When you’re at-fault for an accident and do not have collision insurance, you must pay out of pocket to repair or replace your own vehicle. Collision insurance usually is not needed if the other driver is at-fault, since their liability insurance will pay for damage to your car.… read full answer

Collision insurance can sometimes be helpful after accidents when fault isn’t clear. If you have collision insurance, you can file a claim with your own insurance company while you wait for the insurance adjuster to make an official judgement of fault. Then, if the other driver is determined to be at fault, their insurer will reimburse yours.

Not having collision coverage can also make a claim difficult if you’re hit by an uninsured or unidentified driver. Unless you carry uninsured/underinsured motorist coverage, your only option is to sue an uninsured driver. Still, you’re unlikely to collect anything if you win, as a driver without car insurance is more likely to be unable to pay damages. And some states don’t allow you to use uninsured/underinsured motorist coverage after a hit and run, which means you’ll have to pay for the damage yourself.

It’s generally a good idea to carry collision insurance if you can’t afford to pay out of pocket for repairing or replacing your car. On the other hand, if you have the financial resources to repair or replace your car, you can usually consider dropping collision coverage if the cost exceeds 10% of your vehicle’s value.