Sure, here’s a more conversational and simplified version of the article:
If you own a car, you’re probably aware that almost every state requires you to have liability auto insurance. But what about comprehensive coverage? It’s not mandatory unless you’re still paying off your car. However, it can be a real money-saver when it comes to repair costs, especially for newer, high-value vehicles. The catch? Higher insurance premiums. So, before you decide to add any extra coverage, make sure you understand what it is, how it works, and whether you really need it.
Let’s talk about collision coverage. This is an extra feature you can add to your auto policy that covers more than just medical expenses and property damage caused by your actions while driving. It’s not required by law, but if you’re still paying off your car, your lender will likely require it. Collision coverage takes care of vehicle repair and replacement costs if your car rolls over or collides with other vehicles or stationary objects.
Here’s how it works: if you’re involved in a crash with another vehicle, whether it’s moving or not, your collision coverage should kick in. It also covers damage from hitting stationary objects like fences, buildings, trees, telephone poles, and embankments. However, your car needs to be moving for this coverage to apply. So, if a tree falls on your parked car, don’t expect your collision insurance to cover it. Lastly, if your car rolls over or falls over in a single-vehicle crash, collision coverage applies, even if the car stops on its own without hitting anything.
Now, how does collision coverage work? It pays for damage covered by the policy. If you still owe money on your car, some or all of the money might go to your auto lender. You’ll receive the cost to repair or replace the vehicle, minus your policy’s deductible. Your collision coverage limit is usually the actual cash value of your car. For example, if your car is worth $30,000, your collision limit is $30,000. As your car depreciates, your insurer will adjust the limit downward.
Collision insurance premiums usually cost around $200 per year, but the exact amount depends on several factors, such as your vehicle’s market value, make and model, how much you drive, your vehicle’s vulnerability to potential hazards, your policy’s deductible, and your auto insurance claim history.
However, collision car insurance doesn’t cover everything. It won’t protect you against financial or legal liability for damage or injury resulting from collisions with animals, other animal-related damage, non-collision damage caused by objects, weather-related damage, damage caused by fire or explosion, theft and vandalism, damage caused by negligence, damage due to your own participation in criminal activity, and crash-related liability expenses.
So, should you get collision coverage? It depends. If you’re still paying off your car, your lender will likely require it. If your car is worth a lot, it might be a good idea. If you drive a lot or in dangerous conditions, it could be worth it. And if you’d rather pay a bit more upfront to avoid a big out-of-pocket expense after a collision, it might be the right choice for you. But remember, most cars never get into serious crashes, and collision coverage isn’t the only option for risk-averse drivers. A good emergency fund can serve the same purpose.
In the end, while adding collision coverage might make your policy more expensive, it could pay for itself if you wreck an expensive car. So don’t dismiss it just because it increases your total premium costs. Sometimes, paying more upfront can save you money in the long run.
