Should I Add Collision Coverage to My Insurance Policy?
Car insurance is expensive. To reduce the cost many people opt for only liability coverage and other state requirements, as soon as they pay off their vehicles. Currently, neither Pennsylvania nor any other American state makes collision coverage mandatory. Even so, there are some good reasons to consider it.
What Is Collision Coverage?
According to the Insurance Information Institute, collision coverage pays for any damage to your car caused by impact, such as colliding with an object or flipping over. The insurance company chips in to pay for your vehicle repairs after you pay your deductible.
Note that collision coverage does not cover damage to your vehicle caused by non-collision incidents, such as vandalism or flooding. Instead, comprehensive coverage takes care of this.
How Does Collision Coverage Work?
Some people say that collision coverage only pays for repairs if you have a one-vehicle accident. However, Allstate confirms that this coverage pays for repairs even when another vehicle is involved in the accident. That said, how collision operates may differ, based on state laws. For instance, some states allow collision insurance to cover hit-and-run damage, while others do not.
Here are some important things to note about how collision coverage works in most cases:
- If you hit avoidable objects on the road, such as a pole on the side of the street, the insurance company may treat you as the at-fault driver.
- Collision coverage only pays for damage to your vehicle, but liability coverage pays for damages to other vehicles.
- Unless you have accident forgiveness, you may experience an increase in your premium for filing a collision claim.
- When the cost of damages exceed the value of the vehicle, the insurance company may write off the vehicle and cut you a check.
- The insurance company generally still pays for rollover accidents, even when you are at fault.
- If another driver is at fault for damage to your vehicle, that person’s insurance coverage pays the bill.
What About Paying for Other Damages?
When shopping for insurance quotes, it’s important to understand that collision coverage only pays for repairs to your vehicle: nothing else. This means that if you collide with something else or someone else, another insurance policy coverage foots that bill. If there is no applicable policy, you may need to cover these expenses out of pocket.
In most cases, your liability coverage takes care of damages caused to others or their properties when you are at the at-fault driver. Every state has different liability coverage minimums. For example, these are the requirements in Pennsylvania:
- $30,00 bodily injury liability per accident
- $15,000 bodily injury liability per person
- $5,000 property damage liability per accident
- $5,000 medical benefits
Medical benefits are not part of your liability coverage. Instead, this provides money to cover medical bills for yourself and your passengers, if you suffer injuries in an accident.
How Do Drivers Know How Much To Purchase?
Like comprehensive coverage, collision coverage generally depends on the cash value of your vehicle. The more expensive your vehicle is, the more money you can expect to pay. Insurance companies may also charge higher rates for the vehicles that drivers are most likely to drive aggressively.
After considering all the factors, your insurance company generally determines what your collision coverage will look like. The variations in how much you end up paying for this coverage tends to depend on how much you are willing to pay as a deductible.
It is also important to note that collision coverage and comprehensive insurance come hand in hand. In fact, it is often impossible to purchase one without the other at most car insurance companies.
When Is Collision Coverage Worth It?
If you drive a newer vehicle, collision coverage is worth looking into. This holds true, even if you already paid off the vehicle. The cost of repairing newer vehicles can be far greater than repairing older ones. In fact, any owner of a vehicle that may have pricey repairs could benefit from collision coverage. These may include older model luxury vehicles, foreign imports, discontinued rarities and collector-worthy cars.
Another important question to ask yourself is how much risk you are willing to take on for yourself and how much you are willing to pay to delegate that risk. III estimates that the annual cost of collision insurance is $290.
Most people keep their vehicles for about seven years, so this amounts to $2,030 over that period. If a collision never happens, that’s $2,030 a person paid for a mere possibility. However, if one does happen, Lending Tree estimates that you could end up paying up to $7,500.
Despite the fact that this coverage is optional, roughly 80% of drivers purchase collision and comprehensive insurance. At Tachoir Auto Body, we find that drivers worry less when they know they can rely on the insurance company to foot the bill. Contact us for more information on how collision insurance can improve your car repair experience.