Collision insurance is a type of car insurance coverage that pays to repair or replace your car if you’re involved in an accident, regardless of who was at fault. Collision car insurance is never required by state law, but dealerships and banks usually require it for leased or financed cars. It only pays for damage to your own vehicle, and it does not include coverage for medical bills.
What Collision Insurance Covers
Collisions with other vehicles
Collisions with objects like fences or trees
Single-car accidents that involve rolling or falling over
Damage caused by hitting an obstruction in the road, such as a pothole
Collision coverage costs an average of $382 per year. The cost of collision insurance varies based on your driving history, you car’s value, and your deductible amount. For example, high-risk drivers with a history of claims tend to pay more for collision insurance because they are more likely to be involved in an accident. And if you choose a low deductible for your policy, you will pay more for coverage.
A good rule of thumb is that you should have collision insurance on your car until the cost exceeds 10% of the vehicle’s value. However, even then, you should not drop collision insurance if you cannot afford to pay out of pocket to repair or replace your car after an accident that’s your fault. To learn more, check out WalletHub’s guide to collision insurance.
It is usually better to have comprehensive insurance than collision insurance, if you need to choose between the two. Comprehensive coverage is inexpensive, can be purchased alone, and pays for damage due to events beyond your control, such as vandalism, theft, natural disasters or run-ins with animals.
On the other hand, drivers with a history of accidents or moving violations and drivers who live in high traffic areas should consider investing in … read full answercollision insurance. Given that collision insurance cannot be purchased without comprehensive insurance, you’ll get the benefit of both types of coverage.
Why You Should Get Both Comprehensive & Collision Coverage
If your car is leased or financed, your lender or lessor will likely require you to purchase comprehensive and collision insurance together. But even if you do have a choice, you should still consider purchasing both types of coverage.
Collision and comprehensive insurance are best bought together because they cover different situations. Collision coverage repairs or replaces your car when it’s damaged in an accident, regardless of fault, while comprehensive insurance applies when your car is damaged by something other than an accident.
Ultimately, if you’re still struggling to decide whether to purchase comprehensive or collision coverage, a good rule of thumb is to skip either type if the cost is more than 10% of your car’s value. However, this is just a general guideline, and you should also consider whether you’re in the financial position to repair or replace your car if it’s damaged.
You need collision insurance on an old car if the car is financed or leased. You should also keep collision insurance on an old car if you cannot afford to pay out of pocket to repair or replace the car after an accident.
A general rule of thumb is that you can think about dropping collision insurance if the premium exceeds 10% of your car’s value, so it’s possible that collision coverage might not be worth it on an old car that isn’t worth much. But you should only consider this rule in the context of your own circumstances. If you depend on your car for everyday use and can’t afford to pay for repairs, collision insurance could keep you out of a difficult situation if your vehicle is damaged in an accident.… read full answer
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
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.
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