Collision coverage is a type of coverage that you can choose to have on your auto insurance policy. Not choosing to have collision coverage can save you money on your monthly premiums. However, not having collision coverage can be financially damaging depending on your situation. Collision coverage will provide coverage after you have been in a collision accident, even if the accident was your fault. Here are four things to consider when determining whether or not you should add collision coverage to your policy:
- Value of Your Vehicle: If you have a vehicle that is worth less than a few thousand, having collision coverage may not be worth it since you can just pay out of pocket for the repairs. However, if you have a more expensive vehicle, having collision coverage can help you pay for the repairs, as well as for a new vehicle worth the same amount in the case of a complete loss. Keep in mind that if you have a loan on your vehicle, you are going to want collision coverage. This is because in the case of total loss, you will still have to pay the loan off. If you have collision coverage, the insurance can pay off the loan for you.
- Your Risk: Consider how often you drive. If you drive often or you commute a far distance for work, then having collision coverage can help reduce the risk of being in a financially challenging situation. This is because your chance of being involved in a collision is higher if you drive more.
- Your Payments: Consider how much you are going to be paying additionally each month in order to have collision coverage. If the amount that you pay over the course of just a few years is going to be more than what your vehicle is worth, than having collision coverage is probably not worth it. You can also add collision coverage to your policy and drop it after a year or two if desired. This way you will have the protection, but won't be paying more than what your vehicle is worth.
- Your Savings: If you have savings for emergencies and the amount is decent enough to pay for the cost of repairs in the case of a collision accident, then dropping collision coverage may be worth the risk. This will help save you even more and you won't be in a financially damaging situation in the case of a collision because of your emergency savings fund.
When you consider these four things when deciding whether or not you need collision coverage, you can be sure that you end up saving money while also ensuring that you are going to be protected.Share