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Accidents happen. That’s why auto insurance is available to help protect you and your vehicle when they happen. There are different insurance policies that cover you, your passengers, and your vehicle. Collision insurance is a policy that covers damage to your car when you crash into another vehicle or object. It’s an optional add-on policy in most states, but if you lease or finance a car it’s most likely required by the lender. Similar to no-fault insurance, collision insurance applies whether you caused the accident or not. 

What Does Collision Insurance Cover?

Collision coverage is an add-on policy often bought in combination with liability and comprehensive insurance. Unlike those policies, collision insurance protects your car after damage caused by a driving accident. 

girl sits on the road, near the broken car and calls on the phone, calling for help.

Covers:

  • Crashing into another vehicle
  • Another vehicle hitting you
  • Collision with an object (pothole, tree)
  • A single-car rolling or falling accident

Doesn’t Cover:

  • Injuries to the drivers or passengers
  • Non-driving related damages (weather, theft)
  • The damage to the other vehicle

Should You Be a Collision Insurance Policy Holder?

Now that you know what it is, do you need it? You can never expect when you might be involved in a car accident, that’s why having coverage is important to protect you. This is especially the case with new drivers. It’s wise to consider adding on collision insurance when you have a young driver. Young drivers continue to be involved in vehicular accidents at a high rate. 

If you are leasing or financing a vehicle it’s most likely required by the lender for the leaser to have collision insurance. If you cannot afford it, the lender will buy it and add the costs into your payments. The insurance protects both the lender and leaser if the car was damaged by an unexpected accident. 

Whether you can afford repairs for your vehicle will influence your decision to buy this policy. If you cannot afford to pay out-of-pocket for repairs for any damage to your car or replace a totaled car, it’s advised that you have collision insurance. A person that can afford to replace their car has more of a choice. The driver should evaluate their driving record (how likely they are to get in an accident), estimate how much they will save by dropping the policy, and think through the potential monetary and personal costs that could occur after an accident. Next, we will dive deeper into the costs of collision coverage.

What Will it Cost You?

Woman with hand to face with car collision in backgroundAdd-on insurance policies include added costs to your insurance plan. The cost of your collision coverage will depend on what type of vehicle you own, the cost of your deductible, your past driving record, and your general demographic information (age, location, etc.) 

Vehicle Model

Vehicle insurance payment rates are decided by auto insurance companies. There are many factors and features of a car that affect the insurance rate. For instance, a model may rank highly in car safety, but it has a high rate of being stolen. This factor will cause the insurance rates to increase. 

Deductible

The deductible is simply the amount you pay out-of-pocket for a repair before your insurance company covers the rest of the claim. If you pay a higher deductible, you’ll likely pay a lower premium for collision insurance. Insurance companies offer a range of deductible prices, typically about $100 to $1000 (per accident), to choose which best works for you. Consider the value of your vehicle when choosing a deductible amount. Also note that insurance companies have a limit, the max amount of money they are willing to pay for a claim. 

Driving Record  

The driving history of a person gives insight to the insurer to how accident-prone he is likely to be. A poor driving history will cause a driver to pay more for coverage than a driver with a clean record. 

Demographic Factors

Details about you affect the cost of your coverage. A young, inexperienced driver has a higher rate than an experienced driver. You’ll likely pay more for coverage if you live in a congested city, because of the greater chance of getting in a car accident. 

For More Information

Numerous factors come into play when determining the cost of your collision coverage. Home & Auto Resources is a team of experts ready to provide you with advice and knowledge for all your home and auto questions. For further explanation of collision insurance, we’re here to help. Visit our website for more information! 

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