Should You Carry Collision Coverage? Here’s What to Consider
When it comes to auto insurance, one of the biggest questions drivers face is whether to carry collision coverage. Let’s break down the pros, cons, and key considerations to help you choose wisely.
What Is Collision Coverage?
Collision covers damage to your own vehicle after an accident—regardless of who’s at fault. Whether you hit another car, a tree, or a pole, this coverage kicks in to help pay for repairs or replacement.
The Upside: Financial Protection and Peace of Mind
Minimizes Out-of-Pocket Repairs: Without collision, you cover the full cost to fix your car unless another driver or drivers are negligent. With it, you’re only on the hook for the deductible.
Covers At-Fault Accidents: Even if you cause the accident, collision still applies—unlike liability coverage.
Fast Recovery for Business Use Vehicles: For business owners, downtime means lost revenue. Collision can speed up repairs or replacements to keep operations running.
The Downside: Added Cost and Diminishing Value
Premium Increases: Collision can raise your annual premium by hundreds or thousands—especially if your vehicle is new or high-value.
Not Always Worth It for Older Cars: If your car’s value is low, the payout after an accident may not exceed the deductible + premiums you’ve paid over time.
Limited Payouts: Insurers only pay up to the car’s actual cash value—not what you owe or originally paid.
Cost-Benefit Tip: Run the Numbers
If your vehicle is:
Newer or financed → Collision is often required and recommended. Know that before you purchase. Also, Financed vs. Leased vehicles have different minimum coverage requirements. Know this in advance, as it could mean a significant difference in your monthly payment.
Older and paid off → Weigh the current value of the car against your annual premium + deductible. If it wouldn’t make financial sense to repair or replace it after a crash, dropping collision might be the right move.
Final Thought: Coverage Gaps Can Cost You
Accidents don’t always involve another driver. If you slide off the road, hit a curb, or damage your vehicle in a solo incident, liability won’t help—you’re on your own without collision.
]Not sure what’s best for your situation? Consult with your carier or insurance agent to discuss your needs. At Extennsion, we help drivers and business owners make smarter claims decisions every day. Whether you are unsure of your coverages or already dealing with a claim, we’ll support you every step of the way.