Auto Insurance: Is Collision Coverage Necessary?

Car Insurance to Cover Vehicle Damage May Not Always Be Required

Mar 25, 2009

Collision auto insurance covers drivers financially if their car is damaged or is declared a total loss in an auto accident. Here are the pros and cons of collision.

Imagine purchasing a new car. After showing the shiny new auto off to friends and family, it’s off to work where the car is parked in an underground parking lot. Suddenly another car comes speeding out of nowhere and strikes the new car, causing body damage.

When the damaged car is taken to an auto body shop for repair, the collision center comes back with a jaw-dropping estimate of $3,500. Ordinarily, this figure could potentially send a person into bankruptcy. That’s where collision auto insurance comes into play.

Auto Insurance: What Is Collision Coverage?

In its simplest definition, collision auto insurance protects the driver financially in the event of an auto accident that causes damage to one’s auto. Auto insurance pays for damages incurred to the car in a collision, minus deductible.

Collision auto insurance can cover a wide range of circumstances. For example, damage to one’s car as the result of striking a telephone pole, driving into a cement pillar in an underground parking lot, or a hit and run accident while the car is parked in a parking lot.

Auto Insurance: Why is Collision Coverage Important?

While this auto insurance coverage is technically optional, collision auto insurance is important for drivers to have for a variety of reasons.

First and foremost, auto body repair can quickly become surprisingly expensive. Even what seems like a minor dent can cause financial hardship for the driver when the auto body shop comes back with an estimate that the driver simply cannot afford.

Collision auto insurance closes this gap by paying the driver for the auto damage, minus the driver’s responsibility to pay the deductible he or she selected on the auto insurance policy.

Collision auto insurance is also important to establish what is called full auto insurance coverage which includes not only collision but also comprehensive and liability. Without full auto insurance coverage, drivers are restricted from other auto insurance options such as GAP insurance.

Auto Insurance: Is Collision Coverage Always Necessary?

Generally speaking, everyone should opt for collision auto insurance. It is a financial hedge against auto damage, which typically throughout the life of a car will happen at least once or twice for one reason or another.

However, there are instances where it would make sense to opt out of collision auto insurance coverage. For example, if the insured car is over 10 years old, the cost to repair the auto would surpass the actual cash value of the car, and thus it would be declared a total loss.

In this case, it simply wouldn’t make sense for a car over 10 years of age to be covered under collision auto insurance since any damage to the car would likely result in the auto being declared a total loss anyway.

Collision auto insurance is an important component of the driver’s overall auto insurance policy. While those with 10+ year-old autos may want to drop this coverage, everyone else should elect it to protect themselves financially in the event of auto damage due to an auto accident or an unfortunate mishap.

The copyright of the article Auto Insurance: Is Collision Coverage Necessary? in Automotive Insurance is owned by Daniel Gansle. Permission to republish Auto Insurance: Is Collision Coverage Necessary? in print or online must be granted by the author in writing.

Mar 26, 2009 5:09 AM

Guest :

In most, if not all, personal auto insurance policies, contact with a bird or animal (such as the example of an auto striking a deer in your article) is covered by 'other than collision'(often referred to as Comprehensive) coverage, not Collision. The other example of the "hit- and-run" with a parked car is covered by Uninsured Motorists coverage, not by Collision per se. By carrying Collision coverage, most companies will waive the property damage deductible under UM coverage so that could save an insured out of pocket expense in that sense. GT - Cincinnati