Understanding Automobile Collision Insurance

When it comes to automobile insurance, it’s important to understand your policies. You want to have enough coverage should something happen, but at the same time you don’t want to pay for coverage you don’t need. There are different options available to you and it’s important that you understand them.

collision insurance

Collision insurance coverage is something you need to consider as part of your policy. It has many benefits, but it needs to be under the right circumstances. There are certain things you need to understand about collision coverage and things you need to evaluate about your own vehicle before you decide about moving forward. Take a look at the information below to see what you need to do.

What you need to know about collision insurance coverage

– It’s optional. 

The first thing is that you need to understand this type of coverage. Collision insurance coverage is not required by state law like other types of insurance. For this type of coverage, you can decide for yourself if it’s something you want. If you still have a loan though, your lender will probably insist that you maintain collision coverage and may add it to your loan if you don’t purchase it. 

– What it covers.

Collision insurance can help you in certain accidents. If you have a collision with either another vehicle or hit a stationary object, your vehicle could have a lot of damage. Collision insurance helps to repair or replace your vehicle in these cases. 

This type of insurance is also very helpful in case the other person caused the collision and is uninsured. You may have issues getting the funds from someone who isn’t insured, so collision insurance will be able to help you in this case.

– There is a deductible. 

Usually you would be able to choose the amount of your deductible when you buy coverage. Your deductible should be an amount that you can easily pay in the event of an accident. The lower your deductible, the higher your premium will be, so keep that in mind. 

– There is a limit. 

Keep in mind that there is a limit to the amount that your collision insurance will pay. It will only pay up to the value of your vehicle. It is possible that your vehicle could cost more to fix than it is valued. 

Do I need it?

– Consider your specific vehicle. 

The decision to drop collision coverage is not one to take lightly. It is also one that is different for everyone and depends on your individual circumstances. 

When deciding whether or not to have or drop collision insurance, you need to know the actual value of your vehicle. This is a great place to start. Most people are likely to drop this coverage once their car is at least eight years old, according to analysis from Insurance.com. If you decide to drop your coverage, it should mean that you’re able to function without the car or you can replace it on your own.

Personal finance writer Kathy Kristof suggests to weigh the coverage cost against the replacement cost. If you pay 10 percent or more of the replacement cost of your vehicle for collision coverage, you might want to consider dropping it. In order to determine this, you need to know the worth of your vehicle.

– How to figure out the value of your vehicle. 

Kelley Blue Book is an authority on vehicle value. You will need to do is enter in your vehicle’s year, make, model, mileage and zip code. Then answer some questions about your specific car and you will be able to determine your car’s trade-in value.

– Consider your savings and budget.

When you make any sort of purchase, consider how the cost will affect your budget. You should also take into account how much you have in your savings. Could you replace your car if you had to on your own?

Collision insurance can be a valuable asset in times of need. Make sure you understand your policy and if your vehicle should be covered under this protection. Work closely with your insurance company to fully understand what you need. Contact our Team for more information.

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Understanding Collision Coverage and How to Decide If You Need It

collision coverage

Auto insurance is a necessity in some states and can be extremely beneficial in specific circumstances. With that said, every driver has different needs, so finding the right coverage is necessary to ensure you are protected financially, but at the same time you’re not overpaying for coverage you don’t need. If you drive an older model car, it can be tempting to drop your collision coverage to save money. Find out if you should consider dropping collision on your auto insurance.  


Understanding the Types of Insurance

There are several types of insurance with each intended to address different needs. Some states require drivers to carry specific types of auto insurance coverage. After you have whatever policies you are required to carry, you can adjust the other coverage you choose to have.


Liability coverage pays for damage to other vehicles, people and property you caused while behind the wheel. For example, liability coverage could pay the medical or repair bills if you hit a pedestrian, another vehicle or a mailbox. Most states require drivers to carry liability coverage at a minimum.


Auto collision coverage pays to repair or replace your vehicle if it is damaged in an accident. Your collision coverage will pay the repair bills for damage to your vehicle if you caused the accident. If other drivers are involved and their vehicles are damaged, those repair costs fall under your liability insurance. If another driver hit your vehicle and that individual is found at fault, then their insurance policy would cover the cost to repair your vehicle.


Many auto insurance policies also offer comprehensive coverage. This is coverage designed to cover damage caused by something other than an auto accident. Vandalism, hail or a tree branch landing on your vehicle are the sorts of things covered by comprehensive coverage.

Premiums and Deductibles

Any discussion about auto insurance needs to address premiums and deductibles. A premium is the bill you pay just to have insurance coverage. A deductible is the amount of a claim you are responsible to pay. Once you pay the deductible, your insurance policy will cover the balance. For example, if you cause an accident that results in a $500 repair bill and you have a $250 deductible, you pay your deductible and then your insurance provider will pay the remaining amount.

Finding the Value in Collision Coverage

Collision coverage may not be worth it for you; although, going without may not be a good idea either. A couple factors can help guide you when deciding whether or not to carry collision coverage: your savings and your vehicle. Dropping collision coverage means you need to foot the bill if your vehicle is damaged or be willing to take the loss.

Pay for Repairs

If you have enough of a savings and can afford to make repairs to your vehicle then you may not need collision. This may be an easier decision for owners of older vehicles, because older cars are usually less expensive to repair. Opting for used parts can be a great way to keep costs down and keep repair work in an affordable range.

Cut Your Losses

Collision may be an unnecessary expense for older vehicles with a low value. If the cost to make repairs is greater than the value of the vehicle, most insurance companies will not pay for the repair work. When selecting coverage for an older vehicle with a diminished value, pay attention to how much coverage you choose and consider if it is even worthwhile to have coverage.

Dropping collision coverage can be a great way to save money. This can be particularly helpful if you plan to purchase a new car in the near future. You can use that money saved on collision to put towards your new vehicle.

Other Options

You do have other options if you’re not comfortable completely dropping your collision coverage. You can always adjust your deductible. Deductibles and premiums tend to balance each other out. Opting for a high deductible will decrease your premium, but going with a lower deductible will increase your premium.

You can choose to go with a lower premium which will save you money throughout the year. However, a low premium means a high deductible. If you tend to not have accidents, this can be a good plan to ensure you still have coverage, but you’re not paying a lot. When ever you go with a higher deductible you need to be prepared to cover that cost if you should have an accident.

Finding the Right Fit

Dropping your collision auto insurance can save money. There are a number of reasons why it may make sense to drop your collision coverage. Typically, this is only a good idea for safe drivers of older model vehicles, but each case is different. When you understand your needs and circumstances you can determine what coverage makes the most sense for you and go from there.  If you have questions about your auto policy, contact our team at Bieritz Insurance and we will be happy to assist you!

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