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What is collision insurance?

Last Updated on February 5, 2024 by Andy Walker

 

Alright, let’s talk about something called “collision insurance.” It’s like a saviour for your car when things go crash. So, here’s the lowdown in simple terms:

  • Crash with Your Own Car: If your car flips over or something, collision insurance has your back.
  • Crash with Objects: If you accidentally bump into stuff like a phone pole or a sidewalk, this insurance helps.
  • Crash with Other Cars: Whether it’s a traffic jam or someone hits your parked car on the street, collision insurance steps in.

But, here’s the catch: it only covers fixing your car, not the other stuff around or any injuries if someone gets hurt. So, it’s like a buddy that helps patch up your car after a boo-boo. Got it?

Collision coverage deductibles and limits

It’s like a friend that helps fix your car if it gets into a crash. But, there are a couple of important things to know:
  • Paying Before Help Arrives: Before this friend kicks in to help, you need to pay a bit of money. This is called a “deductible.” You get to pick how much you’re okay with paying when you get this coverage.
  • Deductible Choices: Think of it like picking your ice cream topping. You can choose a low deductible (pay less now, but your monthly payment might be more) or a high deductible (pay more later if something happens, but your monthly payment is less).
  • Limits and Value: This friend also has a limit—it’s the most it will pay to fix your car. Usually, it’s what your car is worth, minus how much it’s gotten old (depreciation).
  • Replacing Your Car: If your car is totally wrecked, they’ll give you money for its old value, minus your deductible. But here’s the thing, it might not be enough to get a brand-new car. You might need to add some of your own money.
So, it’s like having a helper for your car’s boo-boos, but you need to decide how much you’re okay with paying upfront and know that it might not cover everything if your car is really, really old.

What Does Collision Insurance Cover?

Let’s talk about “collision insurance” in a simple way. It’s like a shield for your car when it bumps into stuff. Here’s the lowdown: 

  • Crashing with Other Stuff: This insurance helps when your car runs into things like other cars (whether they’re parked or moving), telephone poles, guardrails, fences, signs, trees, houses, and more.
  • Tricky Situations: It’s not just for regular crashes. If your car flips, if someone hits your car and runs away, or even if you hit a big pothole, this insurance might still have your back.
  • Talking to the Expert: If you’re thinking of getting or already have collision insurance, it’s smart to chat with an agent. They’re like the pros who can help you understand exactly what this insurance covers.

So, think of it as a helper for your car when it accidentally bumps into things. And if you’re ever unsure, just ask the agent—they’ve got your back!

How collision insurance works

If the crash is totally the other driver’s fault, their insurance helps pay for the damage to your car. But here’s the catch:

  • Low Limits: In some places, the minimum amount the other driver’s insurance has to pay is not a lot—maybe just $5,000 or $10,000. That might sound like a bunch, but if your car is worth way more (like the cost of a new one, which is about $50,000), it won’t be enough to cover everything.
  • Your Backup Plan: This is where your own protector, “collision insurance,” comes in. If the other driver’s insurance isn’t enough to fix or replace your car, your own insurance helps out.
  • Insurance Combo There are a couple more saviours, like “comprehensive insurance,” which helps when your car has non-crash problems like fire, hail, or theft. When you put all these together—collision, comprehensive, and another one called “liability insurance”—it’s like having the ultimate team, and people call it “full coverage car insurance.”

So, it’s like having a bunch of friends helping out when your car is in trouble. And just to be safe, it’s a good idea to chat with someone who knows all about this—like an insurance expert. Got it?

Do I need collision insurance coverage?

Let’s break it down in a simple way. So, you might be wondering, “Do I really need something called ‘collision insurance’ if I’m a careful driver?” Here’s the scoop:
  • Not a Must, But Smart: You don’t have to get it by law, but it’s a clever move. Why? Well, imagine there’s a lot happening on the road that you can’t control—other drivers, unexpected things. Do you want to risk paying a bunch of money from your own pocket if your car gets messed up in a crash? Probably not.
  • Protecting Your Ride: Collision coverage is like a shield for your car. It helps you take care of it, especially when you team it up with other coverages like liability and comprehensive. These buddies together make sure your car is super protected.
  • Leasing or Making Payments? Check In: If you’re leasing your car or still making payments, the folks you’re paying might say, “Hey, you gotta get collision coverage.” It’s like a rule for extra protection. So, it’s good to check with them.
  • New Drivers, Listen Up: If you’re just starting out on the road, like teens, collision coverage is extra important. It’s like having a safety net while you’re learning the ropes.
So, it’s not a must, but it’s a smart move to keep your car safe and sound. And hey, if you’re ever unsure, chat with the people who know all about this—maybe your parents or an insurance expert.

How much does collision insurance cost?

Sometimes, when you want to get something called “collision insurance,” the company might say, “Hey, you also need to get this thing called ‘comprehensive coverage,'” or the other way around. There are a couple of reasons for this:

  • Loan or Lease Rules: If you’re still paying for your car with a loan or lease, they might say, “You need both of these coverages to keep your car safe.” It’s like a rule to make sure your car is super protected.
  • Insurer’s Rules: Sometimes, the insurance company might say, “If you want one, you gotta get the other.” It’s just how they do things.

Now, when it comes to how much it costs, on average, people pay about $2,148 every year for this super protection called “full coverage insurance.” But here’s the thing—your cost might be different. Why? Because these insurance folks look at a bunch of stuff, like what car you drive, how much you drive, and where you live.

So, it’s like getting the right gear for your car, and the cost depends on a bunch of things unique to you. If you ever want to know more about this, you can ask your parents or someone who knows a lot about cars and insurance.

Is Collision Coverage Worth It?

Let’s break it down in easy terms. So, there’s something called “collision car insurance,” and whether it’s a good idea for you depends on your situation. Here’s the lowdown:
  • Required for Some: If you’re renting or leasing your car, they might say, “You gotta get this insurance.” If that’s your situation, it’s probably a good idea.
  • Accidents and Repairs: Now, if you accidentally crash your car, the usual insurance helps fix the other person’s car, but not yours. That’s where collision insurance comes to the rescue. Especially if your car is pretty new or fancy, and fixing it costs more than this insurance, it’s a smart move.
  • Smart Thinking: It’s a good idea to check your budget, see how much this insurance costs, and think about your car’s value. Also, make sure the “deductible” (the money you pay first) fits your budget and is less than what fixing your car would cost.
Pros:
  • It helps whether the crash is your fault or not.
  • Less money from your pocket for repairs.
  • Gives you extra peace of mind.
Cons:
  • Doesn’t cover medical stuff.
  • Doesn’t fix the other person’s car.
  • Might make your payments go up.
So, it’s like deciding if this extra protection makes sense for you. If you’re ever confused, just ask someone who knows a lot about cars and insurance—like your parents or an expert. Cool, right?

Frequently asked questions

When to Say Bye to Collision Insurance:

If the money you’d pay (that’s the deductible) plus what you spend on collision insurance is more than what your car is worth, it might be time to drop it. Also, if your car’s value is as much as or less than the deductible, dropping it could make sense because it won’t pay out much, if at all.

Do I Need It for an Old Car?

Not really. See, collision insurance only gives you money up to what your car is worth now, minus the deductible. Older cars usually aren’t worth a lot, so this insurance might not give you much, especially if your car is seriously damaged. Before deciding, check how much your old car is worth.

Is It a Must-Have by Law?

Nope, no state says you HAVE to get collision insurance. But, if you’re still paying for your car, the people you’re paying might say, “You gotta get this.” Even if you own your car outright, it might still be a good idea, especially if your car is expensive or you can’t easily afford repairs after a big crash.

What’s the difference between collision and full coverage car insurance?

Collision insurance is like a buddy that helps when your car gets in a traffic accident. Now, “full coverage” doesn’t have an official definition, but it usually means having collision insurance, plus some extras like comprehensive insurance. It’s like having a whole team of caretakers to protect you and your car in different situations. Cool, right?

About The Author

Andy Walker is a freelance content writer who specializes in writing for insurance and finance related niches. He has years of experience in this field and has written extensively on a variety of topics. Andy’s work is always highly polished and well-researched, ensuring that his clients are always happy with the results.

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