Collision covers damages to your
car arising from a collision with another car or object or if your
car rolls over. The insurance company will pay for the repair or
replacement of your insured vehicle up to the the Actual Cash Value
of the car, regardless of fault.
Although collision coverage is not required by law, most lenders
will require you to purchase it to receive a car loan. Leased cars
and rental cars may also require you to carry both collision and
comprehensive coverage as part of your Car Insurance Policy.
Collision coverage for older cars
Older cars that have low actual cash value can have the comprehensive
and collision coverage eliminated. Insurers won't pay more than
the book value of your car, regardless of what it costs to repair.
In the long run, the comprehensive and collision insurance could
cost more than the car is worth.
Deductibles on collision coverage
You may chose to have a higher deductible for your collision coverage.
Most people consider deductibles of $500 to $1000, depending on
what you can afford. This is the amount that you must pay out of
pocket every time you have a claim. Higher deductibles helps lower
your auto insurance premiums.