What Is Collision Insurance?
If you are wondering what collision insurance is… we just got asked last week. So here is your answer
What is Collision Insurance?
Collision insurance covers damage to your car in an accident. If you’re financing or leasing a new car, your creditor will likely require you to carry collision insurance. Otherwise, it’s an optional coverage. While most car owners prefer to carry collision insurance, as your car gets older, it might make more financial sense to drop coverage. The reasoning is simple — with collision coverage, the most you’ll get from your insurance company is the replacement value of your car. With an older car, this might amount to just a few thousand dollars. If you’ll end up paying out more in monthly premiums than your car is worth, you may be better off in most cases putting that money into an emergency fund. One common guideline is to drop collision coverage when your car’s replacement value is less than 10 times your annual collision premium.
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