Auto Insurance Coverage

Most people are familiar with basic auto insurance.  This coverage is what is required by the state in which the consumer lives.  Typically, this coverage will only pay for the other driver’s property damage and medical bills in the event of an accident.  The consumer’s damages are their responsibility to pay for; basic auto insurance will not pay to fix the consumer’s car.

There are many additional coverages that can be purchased, however.  Collision insurance will pay for the damages that occur to the consumer’s vehicle in the event that they are at fault in an accident.  Comprehensive insurance will pay for damage that occurs to a vehicle or its contents as the result of vandalism, theft, or natural disaster.  Uninsured motorist coverage will pay for the medical bills and damage to the consumer’s vehicle in the event that the consumer is not at fault in an accident, but the other driver does not carry auto insurance. 

Having all of these types of insurance means that a consumer has “full” or “complete” auto insurance coverage.  Deciding whether none, some, or all of these coverages are right for a particular consumer can get tricky. 

Collision Insurance

A car crash on Jagtvej in Copenhagen, Denmark. (Photo credit: Wikipedia)

Collision insurance is typically recommended for any consumer who has an auto loan on their car.  Because this coverage provides money to repair or replace a car in the event of an accident, it is recommended for anyone who would not be able to repair or replace their car on their own if they did happen to be in an accident.  Collision insurance can provide thousands of dollars to a customer, which might mean the difference between having to file for bankruptcy after an accident or simply replacing a car and going back to life as normal. 

Is Collision Insurance a Good Idea?

This insurance can be expensive, however.  In fact, many customers report that it raises their premium prices between fifty and eighty percent.  For this reason, it is important to carefully consider if the customer really needs this coverage.  A person with little or no savings and a car that is expensive to repair or replace would be an excellent candidate for collision insurance.  Someone with a significant amount of savings and/or a vehicle that would be cheap to replace may find that it makes more sense to skip this coverage and save the difference in their premiums.