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What is Collision Coverage?

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What is Collision Coverage?

What is Collision Coverage? Photo by: JJtheJester

What is Collision Coverage?

At its most basic level, collision coverage covers any damage caused by you, the insured driver. Whether you hit another vehicle, run into a tree, or unintentionally roll or flip your car, your insurer would pay the damage.

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If you wreck your own vehicle, your insurer will either pay for the cost to repair the vehicle, or if the cost to repair is more than the value of the vehicle (it’s totaled), they will pay to have it replaced based on its value at the time of the accident.

Additionally, you can choose to use your collision coverage if someone else causes an accident that you are involved in, and their insurer is being difficult or slow to act, or they are not insured or under-insured. Collision coverage will pay your damages and then go seek reimbursement from the other driver’s insurance. Before choosing this course of action, be sure to verify with your insurance company that submitting the claim won’t raise your rates. Because you’re not at fault, it shouldn’t.

Collision coverage is generally an add-on to your insurance plan, and in the event you’re in an accident, the insurance company will pay, minus your deductible amount, for the damages received in an accident.

What is Collision Coverage?

Collision Insurance is a must-have. Photo by Emily Boyd

Is Collision Coverage Required?

States do not mandates that you carry coverage to pay for damages to your own car, making collision coverage optional. An exception is if you have a loan or lease on your vehicle, then your lienholder will likely require that you carry collision coverage.

Consider your driving habits and history (are you accident-prone? do you drive in compact downtown areas?) and your car’s age and value when deciding if Collision coverage is a good option for you. A new car or high-value car may cost much more to fix out-of-pocket, especially in a scenario where your car is totaled. To help determine the current value of your car, check out Kelley Blue Book, NADAguides, and Edmunds, which offer appraisal tools.

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