Demystifying Insurance: Collision Coverage

Collision coverage is a type of insurance that pays for damages to your car from a collision with another car or object, or when your car overturns. It is typically optional unless required by a finance or lease company on a new or used car.

Types of Damages Covered Under Collision Insurance

Most auto accidents fall under this kind of insurance policy. The following list includes some examples of accidents that would be covered by collision insurance:

•    Crash into another car, or another car crashes into you while you're parked
•    Hit-and-run
•    Drive into a stationary object, such as a tree, streetlight, or pole
•    Crash into a ditch or a pothole
•    Car flips over

The main benefit of collision insurance is that you can file a claim and receive reimbursement regardless of who was at fault. Collision claims usually get processed faster than property damage claims because the insurance company does not have to spend time investigating who was at-fault. Another benefit is that you only deal with your own insurance company, rather than another insurer with less incentive to pay for your claim.

Do You Need Both Collision and Comprehensive Insurance?

By having both collision and comprehensive coverage ion your policy you may be protected from being responsible for some costly damage beyond your collision deductible. Even if you have the required liability coverage, it will not be helpful in many situations because it doesn't pay for your car's repairs. You should consider having both collision and comprehensive if any of the following is true:

•    You lease or finance your car
•    Your car is worth more than $3,000
•    Your car is less than 10 years of age

If you’re interested in purchasing collision coverage, many insurance companies will require you to purchase comprehensive coverage as well.