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Collision insurance is insurance coverage that you don’t necessarily have to own in order to drive legally (you MUST own comprehensive) but it’s something that you should probably incorporate into your policy. If you are leasing your car or financing a vehicle through a car loan, your lender might require that you carry collision at all times.

So, what does collision insurance provide and is this coverage worth paying for? Let’s examine everything you need to know:

Understanding How Collision Insurance Works

Collision insurance is basically in place to cover any expense you might incur when you collide with someone or something. More specifically, if you cause an accident with another car or you plow into a fire hydrant or someone’s house or mailbox, your collision coverage is in place to cover YOUR costs associated with that accident.

In addition, your collision coverage will also cover you in the event you experience a complete roll over of the vehicle or if another driver runs into you and does not have sufficient car insurance to cover your costs AND you don’t have additional coverage against uninsured and underinsured drivers.

Collision is different from comprehensive in that the former covers your costs. Comprehensive, which is mandatory in just about all states, is in place to cover the costs of other motorists should you be the responsible party in an accident.

What’s key about that last part of your coverage is the fact that while nearly all states require drivers to carry a liability component to their policy, if you do not hold additional coverage against uninsured or underinsured drivers, you collision coverage can cover some or all of the costs you incur as a result of someone else’s negligence.

Collision coverage is in place to cover all of your costs in an accident where you were deemed at fault. But in some cases, it can also kick in to cover costs you incur in an accident where you were not deemed to be the responsible party.

Must You Get Comprehensive and Collision Together?

While most drivers will purchase both comprehensive and collision on the same policy, it’s not entirely mandatory that you do. Some drivers will try to get their car on the road insured at the bare minimum required by law. For some car owners, insurance can be expensive due to less than perfect driving records so they will meet their state’s minimum for coverage.

As far as collision coverage, this is the part of the policy that pays out for your incurred expenses in the event you are deemed at fault for an accident. So, if your vehicle is damaged or you are injured as a result of a car accident that you caused, your collision coverage will pay these costs. Without that coverage, you are on your own.

So, the question then becomes if you are ready to run the risk of going without this coverage. If something happens to your vehicle as a result of an accident you caused, you could be without your car for days, weeks, perhaps completely depending on the extent of the damage. What if you get hurt? Your current health insurance could cover the costs but how much will you be paying out of pocket?

The debate is whether the money you are paying towards your insurance premiums is worth it to avoid paying potentially a whole lot more later on down the line should something happen. While it’s true this is a speculative scenario, it is one to consider carefully.

Lenders will typically insist that you purchase both comprehensive and collision coverage together if you are financing or leasing your vehicle. This is because you could take a significant financial hit to the tune of thousands of dollars owed in the event that vehicle is totaled only weeks or months after you close the deal on it.

Filing A Claim with Your Collision Insurance

All coverage usually comes with some kind of deductible payment that must be satisfied before your insurance kicks in. That payment could be anywhere from $500 to $1500 and you need to think first before you file.

The best rule of thumb is to refrain from filing your claim if the damage you have incurred costs less than your deductible. That deductible payment is coming out of your pocket anyway, so if you can pay that amount to fix the damage, do it. Otherwise your insurer probably won’t pay it and your rates could go up because you filed a claim.

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