Collision insurance is designed to protect your vehicle if it sustains serious damages in an accident. However, this type of coverage isn’t necessarily an asset in every situation. Collision insurance isn’t mandatory, so it may be time to assess your options.
Keep in mind that collision insurance won’t cover all of the damages to your vehicle. Collision coverage helps with your car’s repairs if you are involved in an accident with another vehicle or object. Collision coverage also steps in if a driver hits your car and doesn’t have enough insurance to cover your damages. While collision insurance is mandatory when you’re financing your vehicle, things may change once you own the car. Here’s a closer look to see if collision insurance is still worth the financial investment.
- Collision Insurance Benefits
In addition to any damages caused to your vehicle as a result of an accident, collision insurance also covers you if your vehicle rolls over. If you’re involved in an accident with someone who has insurance, you can file a claim, and their property damage liability insurance steps in. In most states, minimum liability limits are substantially low, which means they likely won’t have enough to cover the total damages to your vehicle. Your collision insurance would take over to handle the excess repair costs. If you’re financing your vehicle, lenders may require you to purchase full coverage on your vehicle until you own it. This helps prevent a situation where you’re struggling with your loan while dealing with thousands of dollars’ worth of damages because the vehicle was totaled.
- Average Cost Of Coverage
The average cost of collision coverage is around $350, based on research by the National Association of Insurance Commissioners. The cost of your coverage may vary, especially if you choose a group policy. Research shows that collision claims occur more frequently than comprehensive claims, which causes policy costs to rise. Your premium can be lowered if you choose a higher deductible.
- Handling Your Deductible
Collision insurance normally includes a deductible, which is subtracted from your claim. If the total cost of your damages is less than your deductible, it’s recommended that you avoid filing a claim because your insurer likely won’t pay, and your rates will rise. If your vehicle is totaled, your insurer will compensate you based on the vehicle’s estimated value. If your insurer declares the vehicle totaled, but you still try to salvage it, they may not cover you. Remember that your deductible is required even if you aren’t responsible for the damages. In this scenario, there are a few options. You can add uninsured motorist coverage or add a collision deductible waiver to your policy. Adding disappearing deductibles is another option. Some carriers will lower your deductible for every year that you avoid a ticket or accident. Disappearing deductibles is expensive, so it may not be worth it, depending on your situation.
- Is Collision Insurance Necessary?
Collision insurance generally becomes less valuable over time as your vehicle loses value. Because the policy never pays out more than your vehicle’s value, you may be forced into a scenario where the coverage costs more than you would be reimbursed after a crash. Look at collision costs. If the cost of collision coverage plus your deductible costs more than your car’s value, you won’t reap any benefits if your car is totaled. Subtract your collision deductible from your car’s value. If you have enough money saved to cover the damages out of pocket, you may be in a better position simply canceling the coverage. If the calculations show that you still have a small net gain from carrying collision coverage, you can still opt to save premiums by canceling the policy. If you have an older vehicle, carrying collision coverage won’t pay out much if your car is damaged due to its low market value.
Consult with Duane Weber Insurance Inc.
Collision insurance is most beneficial if you don’t have enough money set aside to protect your vehicle in an emergency situation. If the current market value of your vehicle is low, you can assess your options. If you have any questions regarding collision insurance, our agents at Duane Weber Insurance will assist you.