One part of their vehicle insurance that people regularly have questions about is collision coverage. “What is it?”, “how does it work?” and “is it worth it are?” questions we hear all the time. In many cases, collision coverage is absolutely worth it. It is not a huge expense and it can help to cover the costs of repairs if you are ever involved in an accident. Even if you’ve never been in an accident before, you never know what the future holds. Still, that being said, there are some instances where collision coverage may not be worth it. Here we’ll discuss exactly what those situations are.
What is collision coverage?
This is the part of your insurance that pays for damage to your own car. It can be used to pay for any damage repairs whether you hit another driver, another driver hits you, or you hit an inanimate object like a telegraph pole.
But there are several things that collision coverage doesn’t cover. These include damage to another person’s car, your own medical bills for injuries caused by a collision and other damage to your car that isn’t the result of an accident.
You have to pay a deductible
Collision coverage doesn’t cover all of the repairs, however. As part of your insurance, you will need to pay a deductible. This is the amount of money that you are willing to pay out of your own pocket should a collision occur. What amount you decide to pay as your deductible will depend on a number of factors such as your car’s value, how much you can afford to pay in insurance and your risk level. If you’ve never had an accident, for instance, it may be worth having a larger deductible because it is unlikely you’ll ever use it. Just make sure you can afford the deductible though.
Collision Coverage isn’t always worth it
There are some scenarios where not having collision coverage can save you money. You may be required to have collision coverage if you are financing or leasing a vehicle, but it if you own your vehicle outright, here’s when it may be worth dropping it.
Because cars depreciate in value and insurers will only pay out collision coverage at the amount at which the car is valued at the time of the accident, there comes a point in a vehicle’s life when it just isn’t worth owning collision coverage. Typically, this will come at around the ten-year mark, but it may be earlier or later for your particular vehicle depending upon the rate at which its value depreciates.
It may also not be worth having collision coverage if you have a large emergency fund or a spare vehicle. Very few people are likely to be in this situation but for those lucky few who are, it may make more financial sense to fund any repair costs yourself.
If you’ve found yourself in a vehicle accident, whether you have collision coverage or not, come into Chaney’s Collision Centers for a free repair quote.