What does collision insurance cover?
If you had an accident, whether it’s your fault or not, collision coverage helps cover the costs. According to Forbes, collision insurance pays for the repair or replacement of your car if it is damage due to a collision with:
- Another vehicle,
- Another car crashes into your vehicle, such as a hit and run
- A stationary object (such as a fence, building or pole)
While collision coverage is not required by law, if you have a loan or lease on your vehicle, lenders typically require you to carry it. This ensures that the vehicle’s value is protected, says Experian.
Collison insurance offers a higher level of coverage than basic liability insurance and ensures that your car is protected from various risks. It can provide you with that peace of mind knowing that your vehicle is safe and secure. Some collision policies may include additional benefits like roadside assistance and vehicle replacement coverage.
What is not covered by collision insurance?
According to Insurance.com there are some things collision insurance does not cover certain things:
- Damage to another person’s car: if you cause damage to someone else’s vehicle, collision insurance won’t cover for that.
- Damage to your vehicle not relate to driving: this could include theft, if your car is stolen, or weather-related damage such as hail, flood or any other.
- Medical bills: injuries to you or others involved in the accident, collision insurance won’t help.
For additional coverage related to problems like car theft, fire, hail, falling objects (such as tree branches), and collisions with animals, you would need to consider things like a comprehensive insurance. Comprehensive insurance is usually sold alongside collision insurance and is often required if you have a car loan or lease says Forbes.
Collision coverage deductibles and limits
According to Forbes, your car insurance deductible applies to collision insurance claims. The insurance deductible is the amount that is deducted from an insurance claims check. It’s essentially the amount you’re responsible for paying out of pocket before your car insurance company steps in to cover the remaining cost.
When you make a collision insurance claim, the deductible on your policy determines how much you contribute toward the total cost. If you have a deductible and a policy limit, you would essentially be responsible for the deductible, so for example if it was £500 deductible and £1000 policy limit for property damage, you would pay the £500 and your insurer would cover up to £1000 in damages.
Policy limits define the maximum amount your insurance company will pay for covered losses, says Investopedia.
Why buy collision coverage?
Overall, collision insurance is essential for protecting your vehicle and ensuring you’re not left with hefty out-of-pocket expenses after an accident. If you can’t afford to purchase a new car, carrying collision coverage is a smart way to safeguard yourself from the financial burden of replacing a vehicle, says Car and Driver.
If you’re vehicle was ever involved in an accident, and if the loss of your vehicle would significantly impact your finances, then collision insurance might be worthwhile. Collision coverage pays for repairs or replacement if your car is damaged in an accident.
There’s no one-size fits all answer as to whether or not collision insurance is for you. Evaluate your circumstances, weigh the costs, and decide based on your needs and risk tolerance. Consult with an insurance professional to make an informed choice.
