Collision

What is collision?

Collision insurance represents the part of a car insurance police that pays to get your vehicle repaired after it collides with another vehicle or object.

Deeper definition

Collision insurance protects you in the case of an accident involving your vehicle. The different types of collisions covered by this insurance type include when you hit another car or object like a utility pole or fire hydrant, or when another vehicle hits yours while you are parked.

In cases where the accident is your fault, your car insurance company will pay the claim. In instances where another driver hits your parked car, your insurance company pays you and seeks reimbursement from the other driver’s insurance company.

Collision insurance also pays for other acts, such as vandalism, acts of nature or theft, if you do not have comprehensive insurance to cover such claims.

One thing to keep in mind when purchasing collision insurance is the deductible. Most collision coverage comes with a deductible, which is an amount you must pay before the insurance company pays you.

The amount of the deductible affects how much you pay in insurance premiums each month, with most deductibles costing anywhere between $250 and $1,000 per accident.

But keep in mind, if your deductible is worth more than the car you carry the collision insurance on, you might not need to even carry collision insurance.

Collision example

To determine if you actually need collision insurance, consider what your current vehicle is worth. If the amount of your deductible and the premiums you pay each month add up to more than what your vehicle is worth, you should consider not carrying collision insurance. You can put the money saved away to buy another car when needed.

About the only time you need to keep the collision insurance on an older, inexpensive car is if you couldn’t afford to replace your car if needed and you require a vehicle to get around.

If you’re wondering how much car insurance you need, read this Bankrate story.

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