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What is Collision Coverage?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 01 November 2016
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    Conjecture Corporation
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Collision coverage is part of the standard insurance coverage that is provided for automobiles and other forms of transportation where there is the chance of an accident involving another mode of conveyance or the insured vehicle striking a stationary object. Collision coverage is understood to provide resources to repair the insured conveyance, but does not extend to covering medical and other expenses related to drivers and occupants of the vehicle. Generally, collision coverage provides a limited amount of protection, less any deductible that is specified by the policy.

Collision insurance was once considered an optional coverage for auto insurance policies. However, since the latter part of the 20th century, more jurisdictions have made it necessary for persons to carry full auto insurance, including a collision coverage component. In some cases, the vehicle owner cannot renew the tag without presenting proof of insurance coverage that is at least equal the minimum requirements set by the jurisdiction. If the driver is caught operating the vehicle without carrying the minimum amount of insurance, he or she may be fined or lose driving privileges for a period of time.

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Collision coverage helps to protect the insured party in the event of an accident of some type. The focus of this type of coverage is on repairing the insured vehicle. This means that collision coverage does not provide any type of compensation when it comes to damage to property or to any other vehicle involved in the accident. However, collision coverage will provide resources to repair the insured vehicle regardless of who was at fault for the accident.

Depending on the insurance carrier and the amount of coverage desired, the collision coverage may have a small deductible or a large one. Generally, persons who drive older vehicles with a reduced Blue Book value may opt for higher deductibles, since there is a greater chance that an older vehicle will be declared totaled by the insurance company. Newer vehicles usually benefit from lower deductibles, since there is a greater chance that the vehicle will be cleared for repair by the insurance provider.

In recent years, car dealers and financial institutions that extend car loans tend to require that the owner obtain and keep full auto protection for as long as the loan remains outstanding. In some instances, the bank or finance company may require that the owner submit documentation to prove that the vehicle is fully insured, including a collision coverage component, before allowing the consumer to take possession of the automobile.

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ceilingcat
Post 7

I'm glad this article is here. So many people have no idea what's actually included on their insurance policy! I was talking to one of my friend the other day about this same thing.

She actually didn't have collision coverage on her car and didn't realize it! She had an older car, and there was no loan on the car, so she wasn't required to have it.

Anyway, she bought her insurance online. She just bought the package as it came up on the screen. She didn't realize some thing might be missing or that she could tweak her coverages.

So here I was wondering why her insurance was so cheap! Because she didn't have collision or comprehensive!

starrynight
Post 6

@indemnifyme - I think it all has to do with the way you drive your car. I would say that someone who has a newer car and drives 30 miles every day to work needs collision coverage. But a person with a much older vehicle who drives 2 miles each way to work probably doesn't.

Anyway, I think that even if you get rid of your collision coverage, you might consider keeping your comprehensive. This is the other coverage that has a deductible. It covers theft and if a tree falls on your car or something. Those things can happen even if you only drive you car a little bit!

indemnifyme
Post 5

One thing I wanted to mention is that carrying a higher deductible on your collision coverage will lower the overall cost of your car insurance. This is one of the easiest ways to save money on your car insurance!

If you think about it, the money you save with the higher deductible adds up every month. If you go a few years without an accident, you'll have saved more than enough to cover the deductible. And some people go many years without having a car accident! So carrying a high deductible is well worth if for someone like that.

John57
Post 4

I am always nervous if I don't have collision coverage on my car. If something were to happen, I would be out a car and not have any reimbursement for it.

My son had several speeding tickets and was put on expensive high risk insurance. This meant that he could only afford to drive an older car because he couldn't afford collision coverage.

The worst part about this is that if he wrecked the car, he would have to come up with the money to buy a new one because insurance wouldn't cover it.

I always carry collision coverage on my cars, and have a fairly low deductible. If something happens, it is a lot easier to come up with the deductible money than to replace the car.

honeybees
Post 3

In our state you are not required to have car collision coverage, but you cannot apply for a loan unless you have it.

In other words, if you have an older car that is already paid for and you have the title, you are not required to have collision coverage on your policy.

When our kids were growing up and were driving older cars, we didn't keep collision coverage on these vehicles. When you have a newer vehicle it makes a lot of sense to have this coverage.

When I totaled my car during an ice storm, we received a check from the insurance company for the retail value of the car.

This was a Honda

, which they are known for holding their value well. I had driven the car for 2 years and the check we received was not much less than what we paid for the car when we bought it used.

I was definitely thankful we had collision coverage when that happened.

rugbygirl
Post 2

@EdRick - I haven't heard of requiring collision coverage, either, so I'm just guessing, but maybe the idea is less about what individuals are required to do and more about what insurance companies are required to do. That is, perhaps there are places where car insurance companies are not allowed to offer policies that do not include collision coverage.

Different states have their own laws about health insurance plans, for instance. In some places, they're required to include birth control coverage, or to cover certain cancer screenings. I think these days they're required to include reconstructive surgery after mastectomy even though that could be considered "cosmetic."

I assume your "elderly Accord" is paid off, but of course if you

have a loan on a car, the lender will usually require you to have collision and comprehensive insurance as well. The comprehensive insurance covers you in the case of things that are not someone else's fault but not the result of a moving accident, either, like a tree branch falling on your parked car or your car getting flooded in a parking lot.
EdRick
Post 1

I didn't know there were jurisdictions that require auto collision coverage. It doesn't make sense to me. I get why you have to have liability coverage - if you hurt someone else, you need to have enough coverage to pay for their medical bills and repair their vehicle.

But why would the government care whether you lost your car if you were in an accident that was *your own fault*? (If it was someone else's fault, their liability insurance will pay regardless of whether or not you have collision coverage on your car.)

I no longer carry collision coverage on my elderly Accord because it's not worth enough to justify the monthly expense. On the other hand, it makes me nervous; if I got in an accident, I would have a lot of trouble financially replacing the car. (Not that getting a check for fifteen hundred bucks or whatever I would get would make it that much better!)

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