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Do you understand what collision coverage means? When you want to buy your car insurance policy, there is tendency that you are bombarded with different car insurance coverage to the extent that you may be totally confused about what types of coverage you actually need. This usually happens to first time car owners. Even, with the experienced drivers, some of them buy car insurance policy because it is required without actually knowing what the insurance policy covers.

What is collision insurance?

Before, I go into explaining the meaning of collision insurance, I may need to put this scenarios to you. Supposing you just bought your car and you mistakenly hit another vehicle or a stationery object. Can you actually predict what the extent of the damage will be? Possibly your answer will be “No”. It may just be a minor damage which will require that you pay little amount to repair. On the other hand, supposing the car is almost a write off, do you have enough money to replace the car? I understand that many people usually buy their car through auto loan. You can understand the pain of the need to be paying back the auto loan with interest while the car is not even available for you to use again. In order to avoid this type of situation, it may be necessary to buy collision insurance.

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So, what is collision insurance? Collision insurance provide a coverage against damage to your car as a result of accidents. It may be that you accidentally hit another car or an object such as fence, pole or tree. If you have collision coverage, the policy will help you pay for the repairs of the car. If the car is irreparable, collision coverage will pay you to the cash value of the insured car. This means, if your car is still very new, the premium you will need to pay for collision insurance policy will be higher than when the vehicle is almost fully depreciated.

Do you really need collision coverage?

The question many drivers usually ask is whether they actually need to buy collision insurance. What they are saying in essence is that, if it is not compulsory, they may not need it. Well, collision insurance is not a must. Government does not make it compulsory for drivers to have collision coverage for their cars. However, if you borrow money to buy your car, there is likelihood that your lender will make it compulsory for you. The reason is that, your car may likely be the collateral you have for the loan. If this is the case, no lender will like to take such additional risk. If the car you bought with borrowed money is damaged in an accident and you can’t repair the car, it means that the collateral is gone. If you default in paying back the auto loan, the lender may not have any security to fall back at in order for him to recover the loan. Even, if you are able to repair the car, this must have cost you a lot of money. This may make it difficult for you to meet your monthly loan repayment. No lender like chasing debtors around before they get their money back. This costs them time and money.

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Even, if you bought your car in cash, it may still be a wise decision to have collision coverage. No one prepares for accident but you can safeguard your investment in the car just by buying collision insurance. If the premium seems to be too high for you, you can decide to increase your deductible. Deductible is a good way by which one can lower his car insurance premium. The higher your deductible, the lower the insurance premium you will have to pay. However, if you set the deductible too high, it may be burdensome for you to pay if accident should happen. The point is that, the insurance company will not pay for the repairs of your car unless you first pay your set deductible. For examples, if you set your deductible at $600 and your vehicle get involved in an accident which will require $1,000 to repair, you will need to first pay your $600 before the insurance company pays the balance of $400. So, it makes sense that one sets his deductible to the amount he can conveniently pay out of pocket.

What does collision insurance cover?

Though I have mentioned these in the middle of the article above, it is necessary that you understand what you should expect if you have collision coverage on your car.  Collision coverage will ensure that your car is repaired or replaced if involved in any of the following:

• Collision with another vehicle
• Collision with object such as pole, tree and fence
• Rolling or falling kind of accident involving just your car
• Hit and run accident can also be covered. It is possible that another vehicle hits your car in a traffic or where it is parked. Nevertheless, before you buy any insurance, it is good that you ask the insurance company what the policy covers.

In all of the above, It is possible that your car so so damaged that the cost of repairing it is more than the cost of replacing the car. In such cases, the maximum amount that collision coverage will pay you is the value of the car less your deductible. You need to be informed that collision insurance does not provide comprehensive coverage for your car. Instead, it has to be seen as an additional coverage to your car insurance. If you are involved in an accident with your car, collision coverage will only repair your car regardless of who is at fault. It will not repair the car of the other person. Also, collision insurance does not cover damage caused by theft, acts of vandalism, fire, flood, natural disasters or any damage to your car which is not related to driving. If you or another person sustains injury in an accident involving your car, collision coverage will not cover the medical bills you might incur in the process.

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Conclusion

While collision insurance may seem like an additional cost, its benefits might worth the premium you will have to pay especially if you drive a very expensive car or your car is still relatively new. But if your car is already very much depreciated and you can easily afford to pay for any repair, you may not bother yourself with collision coverage. Collision insurance is not compulsory; it is optional. Assessment of the value of your car, the likely cost of the repairs you may need to pay and your ability to pay for such repair will guide you in deciding whether you should buy collision insurance or not. If you still don’t know what to do, you can contact your insurance agent. He will be able to give you professional advice.

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