Collision insurance can be expensive because it is typically included in a full coverage policy, which costs an average of $166 per month. Plus, collision insurance covers the actual cash value of a vehicle, and cars are becoming increasingly expensive. Collision insurance is also more expensive than comprehensive insurance because collision insurance claims tend to be more common. The costliness of collision insurance claims affects customers’ premiums because it puts insurers at more of a financial risk.
3 Major Reasons Why Collision Insurance Is So Expensive
1. It’s Part of Full Coverage
Full coverage insurance policies include your state’s minimum coverage requirements, in addition to collision insurance and comprehensive insurance. Since you typically cannot buy collision insurance alone, it can be expensive to get.
2. Collision Claims Are More Common
Collision insurance is more expensive than comprehensive insurance because the odds that you will file a collision claim are statistically higher. In fact, you are more likely to need to file a collision insurance claim than a comprehensive, bodily injury liability, or property damage liability claim.
3. Collision Claims Are Expensive
Since collision insurance covers vehicle repair costs after car accidents, the cost of the claims can be expensive. For example, the average collision claim can cost more than $3,000, while comprehensive claims are often half as expensive.
You can begin to lower your collision insurance costs by driving safely, potentially trading in your vehicle for a less expensive one, or choosing a higher deductible.
To learn more, check out WalletHub’s guide to collision insurance.
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