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You need separate collision coverage on car insurance to pay for your own car’s damage, rather than liability, if you’re at fault in an accident. With a few exceptions, many drivers benefit from coverage despite the extra cost, because it repays itself if your car gets major damage or needs total replacement.
Collision insurance is a type of car insurance coverage that pays for physical damage to your own car, including repairs or replacing a totaled vehicle. It kicks in when you cause the car accident up to the maximum payout limit you chose on your policy.
If you have collision coverage, you’ll be covered for most car repair costs that come up after an accident. For example, you may need your car fixed or replaced after these types of accidents:
If you’re still paying your car loan off or you’re leasing your ride, your lender probably requires you to have collision coverage. This is because it has a vested interest in the vehicle, and wants to see it paid off or returned.
However, no states legally require you to carry collision coverage. If your car is worth more than you can comfortably afford to replace, it’s a good idea to buy collision coverage, even if you don’t have a car loan. To decide if you need collision car insurance:
Collision coverage doesn’t cover costs for damage to other people’s property. You’ll need property damage liability insurance for that. It also doesn’t pay for others’ medical expenses — only bodily injury liability insurance will reimburse those expenses.
Also, any damage classified as acts of God or nature is excluded from collision insurance. This might include a tree hitting your car or an angry mob vandalizing your vehicle. You may need comprehensive coverage to pay those costs, and your lender may require both comprehensive and collision if you’re financing your car.
Collision coverage typically costs around $290 a year, according to the Insurance Information Institute. Your actual premium will vary based on a number of factors. Your age, driving record, the type of car you drive, where you live, gender and even your credit score can affect how much you pay. And even those factors vary by state.
As with most insurance types, collision coverage comes with a deductible. You’ll choose your deductible when you’re buying this insurance. Then if an accident happens, you’ll pay this amount first before your insurance company kicks in to repair or replace your car.
To decide what your deductible should be, weigh how much car repairs might cost against how much you’d want to pay out of your own pocket. The higher you set your deductible, the less your insurance premiums should cost.
While cruising in his car, Isaac misses a stop sign and rams into another vehicle in the intersection.
Both Isaac’s car and the other vehicle are in rough shape, so repairs are definitely in order. Isaac’s liability insurance will cover the costs for the other party. Meanwhile, Isaac’s collision insurance will help him with his costs — luckily so, as his bill comes out to $4,500. After Isaac pays his $500 deductible, his insurance covers the remaining $4,000.
With collision coverage, you won’t be blindsided by a massive car repair bill. After you pay your deductible, your collision coverage will absorb the rest of the cost.
You can soften the blow of a steep repair bill by adding collision to your existing car insurance coverage. But don’t be afraid to shop around for the best price. You can find coverage that works for you by comparing car insurers using our insurance comparison tool.
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