Collision Insurance and You – A Primer

Who Cares Whose Fault It Is? Just Fix It!

It’s optional unless you’re trying to get a loan on a new car, and you must pay some kind of a deductible when you make a claim, which is discussed further down in this article.

Yes, It Can Happen to YOU

Even the world’s most cautious and careful driver can have a wham-banger of a wreck or only just bend a fender and be the one to blame. As we all know, the accident gods rain on the just as well as the unjust, so checking out collision insurance is just one more way to protect yourself against the whims of fate. If you’ve gotten wet this way recently, then you know already you can’t collect for damages to your car from the other guy (or gal). This is where your collision coverage steps up to the plate and takes care of the costs – provided you had the foresight, were smart enough, and forked out the money to purchase it.

But what if you know in your heart and swear on your great Aunt Agnes’ grave that it was the other person’s fault, by gosh, and the other person swears up and down just as fervently it was yours? This kind of standoff can get you both into a long, drawn-out court case. If you have collision insurance, your insurance company can go ahead and fix or replace your car, and then IT can go toe-to-toe against the other driver with the judge in what is termed “subrogation” in legalese and insurance lingo. Although your insurer is not legally responsible to fight for your deductible reimbursement, it’s an ethical thing most reputable companies do for their clients, which doesn’t necessarily mean you’re special (even though, of course, you are), it’s just the way good companies do business.

Here’s another scenario in which it pays to have collision coverage: The other driver has run a stop sign and slammed right into you. Witnesses abound. The problem is this guy has no liability, no nothing. Suing him wouldn’t be worth the time, energy, or legal retainer fee to worry with, so you check your auto policy or call your agent. Aha! You’ve got both uninsured and underinsured motorist coverage! Are you in the clear then? Maybe, maybe not. But you DO have collision coverage, and that discovery has just made your day. It will cover the whole shebang. Or, if you don’t have it, you can sit down on the sidewalk and cry, and hope someone will come along and feel sorry for you, and hand you the money to get your car fixed or maybe even just toss you the keys to a new one. You just never know what those accident gods might take a notion to do!

And then sometimes there’s the circumstance in which a tree or a utility pole seems to just jump right in front of your car, or a ditch mysteriously appears right in front of you while you’re driving. No matter how many you talk to, no lawyer who still has his or her license to practice is even going to try and sue one of those. But, eureka! You have collision insurance to come to the rescue and get your car repaired. Or not. Then you can kick yourself repeatedly if you can figure out how to physically do it. You never know, those accident gods may cause you to have an epiphany about doing that, too.

How Much to Spring For?

The amount and cost of your collision coverage should rest on the type of car you have and its value. It doesn’t take a brainiac to figure out that those that are high-dollar, easily damaged, thief magnets, or difficult to repair are going to be higher to insure. And the amount you will be paid in case of a wreck will depend on how the accident happened, the extent to which your car was damaged, if new or used parts are used to fix it, among other things the insurance company comes up with. And don’t forget the ultimate kicker: Your insurer is legally bound to pay only the amount up to your car’s cash value. Cash value is what the market value of the car was before the accident less the salvage value of its wrecked condition. So if your car was worth $5,000 before the accident gods rained on you, and the salvage company is willing to give you $500 for it now, your insurance company only has to pay up to $4,500 to get the thing fixed.

Of course, the higher the value of your car, the higher you want to make your deductible. This only makes sense when you look at your risk and compare it to the savings you enjoy by having your deductible higher.

Better Safe Than Sorry

The bottom line is that even though it costs a little more, collision insurance may be a bargain-priced blessing in the end – and one more way to outsmart those wily and unpredictable accident gods.

To Buy or Not to Buy – Is Your Wallet Running on Empty?

If you just cannot afford collision insurance, all is not lost. There is always the chance the other driver is carrying it or another type of insurance so that you won’t get your pants sued off if you have anything for them to get. But you may have to just forget about your own car if the fault was yours. It’s never too late, however, to think about eliminating those after-work happy hours or skipping the every-lunch-out-to-eat habit you’ve acquired in order to get collision insurance in the future. And remember, the accident gods are watching!

Check out our brand new,
extensive and complete
Auto Insurance Guide