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Add-On Insurance Part I: Why Is Collision Insurance Important?

    3 minute read

    Many people opt to buy the most minimal amount of Car Insurance possible. Why do they do this? The answer is usually that they want to save money. It can be expensive just to pay for the minimum Car Insurance that is legally required by the state for all drivers. But in most cases, that minimum amount of Liability Insurance is not enough. People who have only the minimum amount can end up owing hundreds or even thousands of dollars out of pocket after an accident. It’s usually better to pay a little bit more on each payment to have additional Auto Insurance coverage. In fact, add-on coverage like Collision Insurance might just be the only thing standing between you and a financial disaster. 

    Let’s say you have only Liability Insurance on your Car Insurance policy, and you get into an accident. If you’re deemed at fault, your Liability Insurance will cover the other party’s injuries and damages up to your policy’s limits. Even if your insurance covers the other person’s costs, what about the damage done to your car? With only Liability Insurance on your policy, you would have to pay for your own damages and injuries by yourself. That is, unless you have Collision Insurance.

    What Does Collision Insurance Cover?

    Collision Insurance is a coverage that you can add onto your Auto Insurance policy. If you get into a collision, this type of insurance will cover the cost of repairing your vehicle if you’re in an accident, regardless of who’s at fault. It also covers the cost of damages caused by another driver hitting your car while it’s park or if your car rolls over. Hit-and-run accidents are also covered by Collision Insurance. Even damages caused by collisions involving potholes, trees, guardrails, bridges and light posts are covered by this add-on insurance. However, collision Insurance may not cover damages or injuries done to another person’s personal property or city-owned property.

    To fully understand what your insurance company offers regarding Collision Insurance, speak with an Insurance Specialist at (855) 919-4247.

    Collision Insurance Deductible

    As with most insurance, you will have to pay a deductible before your Collision Insurance pays out. Deductibles are typically $500 or $1000 for Collision Insurance, but this varies depending on your carrier. Some may offer a deductible as low as $250. However, remember that the lower your deductible is, the higher your premium is. When choosing your deductible, look at your financial situation. Maybe you can’t afford to pay a $1,000 deductible for an unexpected loss. If that’s the case, it would be a smart idea to lower your deductible and pay more on each payment for your Car Insurance instead.

    Is Collision Insurance Required?

    collision insuranceUnlike Liability Insurance, Collision Insurance is an optional coverage that is not required by law in any state. However, do you lease or finance your car? Most lenders will require you to carry both Collision and Comprehensive Insurance on your policy. If you try to get out of buying Collision coverage, your lender has the right to purchase it for you. But you still won’t get out of paying for it. If you remove your Collision Insurance after buying it, your insurance company will notify your lender. Then, the cost for coverage will usually be added as an expense to your purchasing loan.

    Gap Insurance

    What happens if your vehicle is worth less than what you owe on it and the car is considered a total loss (or “totaled”)? You may end up owing more than your Car Insurance will cover. This situation is often referred to as having “an upside down” loan. If this is your situation, you should also consider adding Gap Insurance to your policy. Gap Insurance covers the difference between the value of your vehicle and the amount you still owe to the lender.

    Speak with an Insurance Specialist

    If you’re trying to save money on Auto Insurance, it actually doesn’t make sense to overlook add-on coverages like Collision, Comprehensive and Gap Insurance. In fact, you could end up paying a lot more money without adding these to your policy. If you’re not sure which add-on coverages are right for you, speak with an Insurance Specialist at (919) 855-4247. You might discover that Comprehensive Insurance is much more affordable than you think.

    The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. Such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.