What is Collision Coverage?

Collision is one of the physical damage coverages available on your car insurance policy. Collision repairs or replaces your car after colliding with something that causes damage to your vehicle.  This could be collision with another car, object or even a single car accident.  

If you are financing your car, your finance company will require this coverage.  They also require that they are listed on your policy as the lien holder or lessor.  

To help decide if you need this coverage, estimate the approximate value of your car.  You can use resources such as Kelley Blue Book, NADA and Edmunds.  Compare the cost of the Collision coverage versus what it could cost you if there was a total loss.  Remember that most insurance companies pay out the Actual Cash Value of your car.  This is the replacement value of your vehicle minus depreciation minus your deductible.  

The cost of Collision is partially based on the deductible option you choose.  The higher the deductible, the lower your premium will be.  When you choose a higher deductible, that means there will be more money out of your pocket when there is a claim.  If you choose to not carry this coverage, you must pay the full amount of repairs or the full replacement cost out of your own pocket.