Should I Get Collision Coverage on My Car?

Introduction

Deciding whether to add collision coverage to your auto insurance policy is an important financial decision. Understanding what collision coverage does and when it makes sense can help you make an informed choice.

What Collision Coverage Does

Collision coverage pays for damage to your vehicle resulting from a collision with another vehicle or object, or from your vehicle rolling over, regardless of who is at fault.

Coverage Details

Collision coverage helps pay to repair or replace your vehicle if it's damaged in an accident. It covers collisions with other vehicles, objects like trees or guardrails, and rollovers.

Deductible

You'll pay a deductible (typically $250 to $1,000) before your insurance covers the remaining repair costs.

When Collision Coverage Makes Sense

Collision coverage is typically worth considering if:

Your Vehicle is Financed or Leased

Lenders and leasing companies typically require collision coverage to protect their financial interest in your vehicle.

Your Vehicle Has Significant Value

If your vehicle is new, relatively new, or has substantial value, collision coverage can provide important financial protection.

You Can't Afford to Replace Your Vehicle

If you couldn't comfortably afford to repair or replace your vehicle out of pocket, collision coverage provides valuable protection.

When You Might Skip Collision Coverage

You might consider dropping collision coverage if:

Your Vehicle Has Low Value

If your vehicle's value is low (often less than $3,000 to $5,000), the cost of collision coverage may exceed the potential benefit.

You Can Afford to Self-Insure

If you have sufficient savings to replace your vehicle, you might choose to self-insure by dropping collision coverage.

Your Vehicle is Paid Off

Once your vehicle is fully paid off, you're no longer required to carry collision coverage, though you may still want it depending on the vehicle's value.

Cost Considerations

The cost of collision coverage varies based on your vehicle's value, your driving record, your deductible choice, and other factors. Consider the annual cost versus the potential benefit.

Key Takeaways

• Collision coverage pays for damage to your vehicle from accidents
• It's typically required if you finance or lease
• Consider your vehicle's value and your financial situation
• Higher deductibles can lower premiums

Next Steps

If you're unsure whether collision coverage makes sense for you, consult with a licensed insurance professional who can help you evaluate your specific situation.