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What is Collision Insurance for Cars?

The figures may seem unbelievable, but there were more than 6.4 million car crashes in the USA in 2008, a figure which has remained more or less stable since 2000. That’s an incredible 12 collisions every minute of every day. Collision Insurance for cars will ease the burden of any expenses you may incur in a collision and this article explains how.

Almost 3 million people were injured and over 42 thousand died. A 1985 report based on British and American crash data found driver error, intoxication and other human factors contribute wholly or partly to about 93% of crashes. An incredible 1 in 4 people will be involved in a collision in their lifetime, although many of these will, of course, be minor bumps.

With these figures in mind it makes good sense to insure against collision damage in your vehicle even though, unlike liability insurance, collision coverage is not required by law.

What does Collision Insurance Cover and why do I need it?

Collision insurance is a car owner’s protection plan for their own vehicle. As a means of saving money on insurance many drivers decide not to take out what is, after all, not a compulsory insurance. However, if the vehicle has a high value, or is a new car, it is wise to include collision coverage in an insurance policy, especially bearing in mind the figures quoted above. Most of us suffer from the ‘it won’t happen to me’ syndrome but the chances are very high that it will. Don’t forget, although you may be a perfect driver, no-one else out there on the road is!

If you are renting a vehicle the contract may stipulate that you have collision insurance. This may also be the case if the car is being bought with a bank or other loan. This is the lender’s assurance that the cost of the car or necessary repairs, will be covered in the event of an accident.

Collision insurance will cover damage to your vehicle if it is hit by anther vehicle, if you hit another vehicle or if you are hit by, or run into, an object including trees, road signs and telegraph poles. Almost any collision which results in damage to your vehicle will be covered. Remember too, that this insurance will pay out even if the accident is your fault.

How to reduce the cost of Collision Insurance

If you have decide that your vehicle is valuable enough to need this insurance you may be discouraged by the high price of premiums. With collisions so common it is inevitable that the insurer will require a high premium to insure against them.

To keep your premiums low, chose as large a deductible as you feel comfortable paying out of pocket. For example, if you have a deductible value set at $1,000 and your car sustains damage which will cost $1,500 to repair, you will pay $1,000 from your own pocket and your insurance company will pay the remaining $500.

If you’re a member of an automobile club, such as the AAA, you can get collision protection covering damage to rental cars above a certain amount. Some credit cards also provide similar coverage when you use them to rent a vehicle.

Do I always need Collision Insurance?

This kind of insurance is really aimed at those drivers who own new or very high value cars. Collision cover is often limited to the value of the car. If you car is worth very little then it may not be financially expedient to take out collision cover.

For cars that have a low value the cost of repairs will often exceed the value of the car itself. In this case it may make more sense to put the premium you are paying for collision insurance into a high interest bank account to pay for any possible repairs, rather than handing it over to the insurance company every month.

If you are not sure how much your car is worth you can use online resources, such as the Kelley Blue Book, to find out, in order to accurately assess if collision insurance is worthwhile for you. The value of your car will depend on the year, make and model, the mileage done, the existing condition of the car and any additional features, such as customized interiors or a sunroof.

1 comments - what do you think ?

Finley Keller Says:

Information here is correct except to clarify that if your vehicle is financed, you most assuredly will be required to carry Collision and Comprehensive (Other Than Collision) coverage on the vehicle. The rates do consider the cost of replacement – total or partial (parts). A note about dropping the coverage on older vehicles, be mindful that in a non-fault collision with an uninsured motorist (unless you have elected UMPD) or simply have a hit-and-run, you will be out of everything. That is not advocating keeping the coverage on an older vehicle but to weigh the pros and cons – especially in regard to your personal financial ability to compensate – rather than simply make a black or white decision. There could be many gray areas that should be considered and addressed.

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