When it comes to auto insurance, there are a number of different coverages you can get to cover various types of damage and liability issues for both you and other drivers. Collision is a type of insurance coverage that will pay for damage to your car that’s caused by a crash, whether or not you are at fault. There are several reasons why you might need collision coverage.
You owe money on your car
If you have a loan on your car, you will need collision coverage at least until it is paid off. Most lenders require you to get what’s called full coverage when you have an active loan. Such coverage includes collision and comprehensive, which covers your car for damage caused by something other than a crash, such as weather damage or vandalism.
You lease your car
If you lease your automobile, the leasing company will require you to have full coverage, including collision coverage. The company wants to protect the car since it still owns it, and since you are the one driving it, it’s your responsibility to insure it.
Your car is worth a significant amount
Even if you own your car outright, with no lien on it and no requirement to carry collision insurance, it can still be a good idea. If your car is still fairly new and still holds a lot of value, it’s a good idea to protect it with collision insurance. You have to factor in what your premium is, what your deductible is and how much your car is worth. For example, if you are paying $500 a year for collision coverage with a $1,000 deductible on a car worth $2,000, it’s probably not worth it.
Other people drive your car
If you let other people drive your car, it is a good idea to have collision coverage. If the person driving your car causes an accident, his or her insurance is likely to only cover damage caused to the other driver’s car, not yours, so if you don’t have collision coverage, you could wind up having to pay out of pocket to repair your car.
You park your car on the street or in a lot
If you regularly park your car on a street or in a parking lot often, it can be a good idea to carry comprehensive insurance. If your car is the victim of a hit and run while parked or if it is hit by someone without liability insurance, you can wind up getting stuck with the repair bill. Collision will cover repairs if your car is hit by an unknown driver or by someone who doesn’t have at least liability insurance.