Collision Coverage" is what the name implies:
If your car hits another object (like a tree or guardrail), if it overturns in an accident, or if it is hit by a "hit and run" driver, collision coverage will pay for it to be repaired or replaced. Remember it's important to keep in mind your deductible when considering coverage.
You may want to add Collision Coverage to your policy if you are worried about paying for damage to your vehicle if you run into or are hit by something or someone, or if your car overturns. Keep in mind that the deductible that Collision Coverage may include is a portion of the repair bill that you pay before your insurance coverage kicks in. If you are concerned that you might not be able to pay for the repair or replacement of your vehicle, you might want to consider getting Collision Coverage and choosing an insurance deductible that you think is manageable.
If you're leasing or financing a car, your contract or lienholder may require you to carry Collision Coverage.
However, if your car is 8 years old or older, you'll want to consider if it's right for you to include Collision Coverage on your policy. The harsh truth is that older cars generally don’t retain their value. And, because Comprehensive and Collision Coverages are usually limited to the cash value of your car, you need to evaluate whether the cost of including that coverage on your policy is worth it to you.
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In addition, if you use your vehicle for work or own a fleet for business purposes, you might need commercial auto insurance with Collision Coverage. Motorcycle owners also need a policy with liability insurance to ride.
You must meet your state's minimum limits, or you can select higher limits for more financial protection. Your policy's liability limits determine the maximum amount your car insurance company will pay if you need to use your coverage.
Limits are represented as two numbers. For example, you could choose bodily injury Collision Coverage with a minimum limit of $25,000/$50,000.
Like bodily injury liability, you must meet the minimum property damage Collision Coverage limits set by your state. You also have the option to select higher limits for increased financial protection. For instance, if your state mandates $25,000 in property damage Collision Coverage, you can choose that amount or carry $50,000 or more instead. Any property damage you cause beyond your coverage limit will be your responsibility to pay.
Collision Coverage offers no protection for your own medical bills or vehicle repairs. If you have liability-only coverage and you're in an accident, you’ll be responsible for paying those costs out of pocket. Additionally, if your car is vandalized or stolen, you'll have to pay for your vehicle to be repaired or replaced.
If you’re concerned about covering your own expenses in the event of a car accident, you should consider getting medical payments coverage and both comprehensive and collision insurance.
Collision Coverage generally refers to the most basic level of coverage that you can purchase for a vehicle. Sticking to liability-only car insurance is one way to keep your insurance costs low, but it's not an option for every driver. For instance, if you're leasing or financing your vehicle, you may be required to carry coverage that goes beyond minimum liability insurance. On the other hand, if you don’t drive much or have an older paid-off vehicle, it may not make financial sense to purchase these optional coverages.
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