4 Reasons to Purchase Collision Insurance, Even If It’s Optional
While you may think of your car insurance as a single policy for which you make one monthly payment, auto insurance providers price each coverage component separately.
While shopping around for a new insurance plan, you’ll have to decide which coverage forms you want to include in your policy. Before researching any further, check your state auto insurance laws to find out your state’s coverage requirements and minimums.
Most U.S. states do not legally require drivers to purchase collision insurance—but that doesn’t mean you should write it off as unnecessary.
What Does Collision Insurance Cover?
As the name suggests, collision insurance covers the cost of damages caused by a vehicular accident. While property damage liability pays for the damage a policyholder causes to someone else’s car or property, collision insurance covers costs to repair or replace the policyholder’s vehicle.
This form of coverage applies to collisions with other vehicles or objects, as well as accidents that don’t involve another driver, such as the policyholder’s car flipping or rolling. When it comes to collision insurance, it does not matter if the policyholder is found at fault for the damage. The insurance provider will cover the difference between the actual cost of car repair or replacement and the policyholder’s deductible.
Why Buy Collision Coverage?
As previously mentioned, most states do not mandate that drivers purchase collision coverage. However, you may want to consider adding it to your auto insurance plan for the following reasons:
- Though the state may not require collision coverage, many car lenders do. If you intended to rent or lease a vehicle, be sure to inquire about minimum insurance requirements.
- Collision coverage helps pay for the common “everyday” incidents that most drivers experience at some point in their life. For example, this insurance form covers damages caused by driving over large potholes, hitting a mailbox, hitting the curb, hitting a guardrail, at-fault, and fender benders.
- If you own an expensive or luxury vehicle, collision insurance providers greater peace of mind. Should you damage or even total your car, the insurance will make up the difference between your deductible and the cost of repairs or replacement. The more expensive your car, the more you stand to lose if you defer purchasing collision insurance.
- If you fall into a high-risk driver demographic, you’re more likely to need collision insurance at some point during your policy term. You should seriously consider collision insurance if you have young drivers on your policy, if you have senior drivers on your plan, if you travel long distances often, or if anyone on your policy has a history of accidents.
Calculating the Cost of Collision Insurance
As with all forms of auto insurance, insurance providers can base collision insurance rates off numerous factors, such as:
- Marital status
- Driving record
- Credit score
- Past insurance claims
- How often you drive
- The model car you drive
- Your car’s added features
- The overall value of your vehicle
The deductible you choose will also affect your premium; the higher your deductible, the lower your premiums. Many drivers with clean accident records view high deductibles as a way to save money on car insurance.
You should also note that collision insurance policies have upper limits. In most cases, the limit is the full cash value of your car, with depreciation considered.
A Safe Investment
Purchasing any form of insurance always comes down to a risk-benefit analysis. When the law doesn’t require a particular type of coverage, it falls entirely on individuals to assess their risks and make a wise investment.
If you’re still on the fence about whether or not you should add collision coverage to your policy, take the time to research and gather your own records. Look back on your driving history, look up your car’s value and calculate the depreciation, and assess the risks associated with your demographic.
Lastly, gather quotes from numerous providers and compare costs. With accurately projected figures of what you’d pay for the coverage, you can make the final decision of whether or not to include the coverage in your policy.
© 2020 The Havok Journal