Collision Insurance: What It Is, How It Works, and Why You Need It

If you own a car, it’s important to have insurance to protect yourself and your investment. Collision insurance is one type of coverage that can help pay for damages to your vehicle if you are in an accident. Read on to learn more about what collision insurance is, how it works, and why you might need it.

What is Collision Insurance?

Collision insurance is a type of auto insurance coverage that helps pay for damages to your vehicle if you are in an accident. This type of coverage is designed to help cover the cost of repairing or replacing your car if it is damaged in a collision with another vehicle, object, or any other type of obstacle.

Collision insurance is not required by law, but it may be required by your lender if you are financing your vehicle. Even if it’s not required, it’s a good idea to have this type of insurance if you want to protect yourself and your investment.

How Does Collision Insurance Work?

Collision insurance works by paying for damages to your car if you are in an accident. This type of coverage typically has a deductible, which is the amount you agree to pay out of pocket before your insurance kicks in. Once your deductible is met, your insurance company will cover the remaining cost of repairs or replacement up to the limits of your policy.

If the cost of repairs or replacement exceeds the limits of your policy, you will be responsible for paying the remaining balance. This is why it’s important to choose a policy with a limit that is high enough to cover the cost of replacing your vehicle if necessary.

What Does Collision Insurance Cover?

Collision insurance covers damages to your vehicle if you are in an accident, regardless of fault. This type of coverage typically includes:

What Collision Insurance Covers
Damage to your car from a collision with another vehicle
Damage to your car from a collision with an object (e.g. a tree, guardrail, or building)
Damage to your car from a rollover accident

Some collision insurance policies also cover damages caused by uninsured or underinsured drivers, as well as hit-and-run accidents. However, coverage may vary depending on your policy, so it’s important to review your coverage carefully.

What is Not Covered by Collision Insurance?

While collision insurance can help cover damages to your car if you are in an accident, it does not cover other types of damages. For example, collision insurance does not cover:

What Collision Insurance Does Not Cover
Damage to another person’s car or property
Injuries to yourself or others involved in the accident
Damage from non-collision events, such as theft, fire, or natural disasters

To cover these types of damages, you may need additional types of coverage, such as liability insurance, comprehensive insurance, or personal injury protection.

Why You Need Collision Insurance

If you own a car, collision insurance can be a valuable investment. Here are a few reasons why you might want to consider this type of coverage:

Protect Your Investment

Your car is likely one of your most valuable assets. If you are in an accident and your car is damaged or totaled, you could be facing a significant financial loss. Collision insurance can help protect your investment by covering the cost of repairs or replacement.

Comply with Lender Requirements

If you are financing your vehicle, your lender may require you to have collision insurance to protect their investment. If you don’t have this coverage and you are in an accident, you could be in violation of your loan agreement.

Peace of Mind

Knowing that you have collision insurance can give you peace of mind when you’re on the road. You can drive with confidence knowing that if you are in an accident, you have coverage to help pay for damages to your car.

FAQ

Do I Need Collision Insurance?

While collision insurance is not required by law, it’s a good idea to have this type of coverage if you own a car. Collision insurance can help protect your investment and give you peace of mind when you’re on the road.

How Much Does Collision Insurance Cost?

The cost of collision insurance varies depending on a number of factors, including your age, location, driving record, and the make and model of your vehicle. To get an accurate quote, it’s best to contact your insurance provider.

What is a Deductible?

A deductible is the amount you agree to pay out of pocket before your insurance kicks in. For example, if your deductible is $500 and your car is damaged in an accident that will cost $1,000 to repair, you will be responsible for paying the first $500 and your insurance will cover the remaining $500.

Can I Change My Deductible?

Yes, you can typically change your deductible when you purchase or renew your collision insurance policy. However, it’s important to choose a deductible that you can afford to pay out of pocket if you are in an accident.

How Do I File a Claim?

If you are in an accident, you should contact your insurance provider as soon as possible to report the incident and file a claim. Your insurance provider will guide you through the process and help you get the coverage you need to repair or replace your vehicle.

What Should I Do If I’m in an Accident?

If you are in an accident, there are a few things you should do to protect yourself and your investment:

• Check for injuries and call 911 if necessary
• Exchange information with the other driver(s) involved
• Take photos of the accident scene and any damages
• Contact your insurance provider to report the incident and file a claim

Conclusion

Collision insurance is an important type of coverage that can help protect your investment if you are in an accident. While it’s not required by law, it’s a good idea to have this coverage if you own a car. Contact your insurance provider to learn more about collision insurance and whether it’s right for you.