Do I Really Need Collision Coverage on My Auto?
The legal minimum requirement for auto insurance in many states is third-party liability coverage.
This means that if you are in an accident that is deemed or proven to be your fault that your insurance company will pay for the repairs or bills incurred by the third party to the accident.
Mandatory third-party insurance is designed to give road users peace of mind that accidents can be paid for and they can get back on the road if somebody else is at fault.
The drawback to third-party insurance, however, also comes in an accident that is your fault.
Your own repairs, replacement car, medical and legal bills will have to paid by you, or the driver of the vehicle.
These costs can mount up and be a severe financial strain.
Collision coverage offers a way to pay little bits at a time to prepare for the worst, so that a very large payout will be met by your insurance.
This payout may be in the form of payments to repair the vehicle, or be paid to the insured in cash in the case of repairs being too expensive.
Even when you have collision coverage, you will still be liable for any deductible, the same as if you only have third-party coverage.
This deductible will however oftentimes be low when compared to the overall cost of an accident.
Accidents can happen anywhere at any time, and a car is often one of the major sizeable investments that people make over a lifetime.
When financing a car through credit terms or a loan, the credit provider may insist you take out collision coverage on your auto.
This is to protect the credit provider's investment in your car.
In the same way, collision damage waivers (CDWs) are often offered by rental companies to ensure that if you are involved in a collision while driving one of their rentals, you are covered by insurance for the cost of the car and repairs.
In the end it is up to you as the insured what kind of coverage you wish to take out on your vehicle, subject to your local laws and regulations.
This means that if you are in an accident that is deemed or proven to be your fault that your insurance company will pay for the repairs or bills incurred by the third party to the accident.
Mandatory third-party insurance is designed to give road users peace of mind that accidents can be paid for and they can get back on the road if somebody else is at fault.
The drawback to third-party insurance, however, also comes in an accident that is your fault.
Your own repairs, replacement car, medical and legal bills will have to paid by you, or the driver of the vehicle.
These costs can mount up and be a severe financial strain.
Collision coverage offers a way to pay little bits at a time to prepare for the worst, so that a very large payout will be met by your insurance.
This payout may be in the form of payments to repair the vehicle, or be paid to the insured in cash in the case of repairs being too expensive.
Even when you have collision coverage, you will still be liable for any deductible, the same as if you only have third-party coverage.
This deductible will however oftentimes be low when compared to the overall cost of an accident.
Accidents can happen anywhere at any time, and a car is often one of the major sizeable investments that people make over a lifetime.
When financing a car through credit terms or a loan, the credit provider may insist you take out collision coverage on your auto.
This is to protect the credit provider's investment in your car.
In the same way, collision damage waivers (CDWs) are often offered by rental companies to ensure that if you are involved in a collision while driving one of their rentals, you are covered by insurance for the cost of the car and repairs.
In the end it is up to you as the insured what kind of coverage you wish to take out on your vehicle, subject to your local laws and regulations.
