When it comes to auto insurance, one of your top criteria for deciding how much coverage you need is how much you drive. Are you a daily commuter or a work-at-home occasional driver? The more you drive, the higher your risk of getting into an accident. Here are answers to common auto insurance questions about collision coverage.
What is Collision Insurance?
Collision insurance provides financial protection if your vehicle is damaged in a collision and needs repair or replacement. Conventional auto loan lenders typically require you to carry collision coverage since they have a vested interest in the vehicle until you repay the loan.
One reason to keep collision insurance is to protect the value of your car, which can be damaged by weather, vandals, and unexpected events. Windy storms can cause flying debris to scratch your vehicle’s exterior. A flying object from a big truck can crack your windshield.
If your vehicle collides with another vehicle, it doesn’t matter whose fault it was, as your collision coverage will pay to repair or replace your vehicle. However, it will not cover the costs to repair the vehicles of other parties involved in the crash. Compared with other types of auto insurance coverage, collision coverage is expensive.
When is a Good Time to Drop Collision Coverage?
Collision insurance is not required by any state, so the main reason people get it is to access a car loan. Soon as you pay off your last car payment, you no longer need this coverage if you’re going for the bare minimum coverage.
Although it doesn’t cover bodily injuries, it will pay for many types of events that damage your vehicle or e-vehicle. It’s a good idea to hang on to this coverage if you own an expensive or unique vehicle. The coverage pays for repair costs when you run over an object or a pothole. It will also cover repair work if your car flips over.
One of the main reasons many people who have paid off their cars don’t carry collision insurance is to cut expenses. The cost of living expenses keeps rising while incomes remain stagnant. People are looking for ways to tighten their budgets to offset rising gas prices. Often insurance is one of the first places they look to cut costs.
If you’re no longer financing your car, you should determine your car’s value before keeping or dropping coverage. Then talk with your insurance agent about what type of benefits you’ll get if your car gets damaged in an accident.
Rules to Consider
- Cars Over 8 Years Old – Once a vehicle is over eight years old, you might think about dropping collision coverage. At this point, the car’s value significantly drops off, and you probably won’t get much for settlements.
- Are You Required to Carry Collision Insurance? – No, it’s usually only a requirement when you need a loan.
Contact us at Hoffman Brown Company for more information on what you need for your personal auto insurance coverage.