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Do You Need Collision Insurance?

Yes, you need collision insurance if your car has any significant value.  However, you do not have to have collision insurance to legally drive a car on US roads.  Liability insurance, insurance which covers damage to another driver’s vehicle as well as injuries another driver and his passengers sustain if you are at fault in an accident, is the only type of insurance you have to have in many states to operate a vehicle legally. Yet, if you are in an accident and your car is damaged, having collision insurance can keep you from having to pay for your car repairs out of pocket.

What is Collision Insurance?

Collision insurance is one of the three types of insurance that is included in full coverage.  It covers damage to your vehicle when you are in an at fault accident. It can also cover damage that occurs to your vehicle if you are the victim of a hit and run.  To learn more about what collision insurance is, check out What Is Collision Insurance? And How Much Does It Cost?.

Why Do You Need Collision Insurance?

Financial Protection

You may be a safe driver, but that does not always prevent you from being involved in an accident.  Even the best drivers can find themselves in an accident at some point in their lives. Having the proper auto insurance protects you financially if this were to occur.  Your car is often one of your most expensive possessions. It can cost a great deal to repair or replace it.

If you are at fault in an accident and your car is damaged, you need collision insurance to pay for the repairs.  If your car is totaled, collision insurance pays you the actual cash value of the car so that you can pay off your auto loan or put the money down on another vehicle. Without collision insurance, you will not receive compensation for your lost or damaged vehicle and will have to come up with the money to repair or replace your car without the help of your insurance company.  

Furthermore, even if you are not at fault in an accident, you may still need collision insurance to get your car repairs done in a timely manner.  This is because filing a claim with another person’s auto insurance company may take a while to settle. In the meantime, your damaged car needs to be repaired back to drivable condition. You can file a claim with your auto insurance company if you have collision insurance to cover the repairs.  When your claim is settled with the other insurance company, your auto insurance company can recoup the money through subrogation.

Lender Requirement

If you finance or lease a vehicle, your auto lender will probably require that you have collision insurance for the life of the loan or lease. Thus, even though you are not required to have collision insurance by law, you will have difficulty getting a car without it.

Final Thoughts

You need collision insurance even if you are not required to have it by law.  Without this insurance, you may be stuck with a huge repair bill that you have to pay out of pocket if you are in an accident.  If your car has any monetary value, it would be wise to have collision insurance.

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