Collision Insurance

Automobile collision insurance protects you from financial loss in case of some very particular events. As its name implies, it comes into effect if you hit something with your car or someone runs into you. This form of insurance usually isn't mandated by law, but many auto loan companies will require that you carry it until the loan is paid off.

Some forms of collision insurance coverage will pay for repairs to your car, but this isn't always the case. If you run into something, certain policies will only pay for your resulting liability. For example, if you run into a mailbox, the insurance company may pay for the box's replacement - but not to remove the dings from your bumper. If you choose one of these limited automobile collision policies, you'll need to add other coverage to make sure that your own vehicle's damage is paid for. The main goal of collision coverage is to protect you from liability to others.

Auto insurance collision policies won't protect you from sources of damage that don't arise from things hitting the car or vice versa. Vandalism, theft, road conditions and weather events are among the issues that collision coverage doesn't address. Even collisions caused by hit-and-run drivers may not be covered under certain policies.

Pros and Cons of Collision Coverage

There are benefits and drawbacks to collision insurance. The benefit is that you don't have to worry about being financially wiped out if you somehow drive through a store window or skid into someone's rear end. If your policy covers damage to your own vehicle, you won't even have to worry about the cost of having it repaired. Perhaps most importantly, auto lenders often require borrowers to have a full complement of auto insurance.

On the other hand, those who have paid off their car loans may find that the cost of collision auto insurance is higher than the expected benefit. Motorists with a long history of safe driving may feel it's extremely unlikely for them to be in a major accident. For these people, it may be best to only carry the coverage mandated by their state of residence. It is, however, important to consider the fact that flukes can happen to even the best drivers. It might be a good idea to carry auto collision coverage for your own peace of mind even if you have a flawless driving record.