Collision Insurance is a type of car insurance coverage that helps pay for repairs or replacement of your vehicle if it is damaged in a collision, regardless of who is at fault. This type of coverage is optional, but it is often required by lenders or leasing companies if you’re financing or leasing your vehicle.
Key Features of Collision Insurance:
- Covers Damage from Collisions: Collision insurance pays for damage to your vehicle caused by an accident, whether you hit another car, a tree, a fence, or any other object.
- Regardless of Fault: Unlike liability insurance, which only covers damages to others when you’re at fault, collision insurance covers your vehicle no matter who is responsible for the accident.
- Repair or Replacement: If your vehicle is repairable, collision insurance will cover the cost of repairs. If it’s beyond repair (a total loss), it will pay for the replacement cost, minus your deductible.
Example:
- If you hit another car or run into a pole, collision insurance will help cover the cost of fixing your car. However, you’ll typically have to pay your deductible (the amount you’re responsible for before your insurance kicks in) before the insurer pays the rest.
Deductible:
- Collision insurance often comes with a deductible. This is the amount you’ll pay out-of-pocket before your insurer covers the remaining costs. Deductibles usually range from $250 to $1,000 or more, depending on your policy.
Why You Might Need It:
- Vehicle Age & Value: If your car is relatively new or valuable, collision insurance can help protect you from the high cost of repairs or replacement after an accident.
- Peace of Mind: If you’re concerned about the potential cost of repairing your car after an accident, collision insurance offers financial protection and peace of mind.
While not mandatory by law, collision coverage can be an essential part of your auto insurance policy, particularly if you’re driving a new or valuable car.