Do I Need Collision Insurance for My Auto Policy?

Posted on: September 25th, 2020 by Accurate Auto Body Shop No Comments

In Colorado, you’re legally required to carry an auto insurance policy for your vehicle. That being said, you do have a fair amount of control over which types of coverage to include on your policy. One coverage option that can be extremely beneficial in the right situations is collision insurance.

What Is Collision Insurance?

Collision insurance covers the costs associated with repairing or replacing your vehicle after a car accident. This type of insurance will cover damage caused by:

  • A collision with another vehicle where you are at fault for the accident
  • A single-vehicle collision with a stationary object, such as a tree, fence, car, pothole or mailbox
  • A single-vehicle rollover accident

Is Collision Insurance Required?

Do I Need Collision Insurance for My Auto Policy?Colorado does not require you to carry collision insurance as part of your policy. However, there are certain exceptions. You will typically be required to have collision insurance if you lease your vehicle or have payments remaining on a car loan for a vehicle you purchased. In these situations, collision insurance is required to protect the lender or leasing company from financial loss after an accident.

While collision insurance usually isn’t required, there are many situations where it’s in your best interest to purchase this coverage for your vehicle. This is particularly true when you have a newer vehicle that would be expensive to replace in the event of a total loss. Ultimately, you’ll need to crunch the numbers to determine whether the cost of this coverage, which can run several hundred dollars a year, will deliver enough value after a serious accident to justify the expense.

Factors to Consider When Determining Whether to Purchase Collision Insurance

Unless you’re required to purchase collision insurance by a lender holding a lien against your vehicle, the decision should be strictly based on financial factors, including:

  • The value of your car – If your vehicle is still relatively new, the cost to repair or replace it with a car of equal value may be fairly high. However, an older vehicle that has depreciated in value significantly may not justify the expense of the coverage.
  • Your financial situation – Can you afford to pay for costly repairs out of pocket? Will you be able to pay for a new car if your vehicle can’t be repaired? If not, collision coverage can be very important.
  • The cost of your collision insurance – There are two aspects to the cost associated with collision insurance: the amount you pay for this coverage on your monthly premiums and the deductible you must meet before this coverage kicks in. These costs must be deducted from the amount you’ll receive after an accident when determining the value of this coverage.
  • How long you intend to keep your vehicle – Are you hoping to drive your car for several more years in order to avoid car payments? If so, collision coverage may be more desirable. If you’re planning on trading in your vehicle in the near future, it may not be worth paying for this coverage.

You can determine the maximum value of your collision insurance using the following formula:

current value of your car – [the cost of your premium + your deductible]

For example, if your vehicle is worth $10,000 and you pay $350 every six months for collision insurance with a $1,000 deductible on your policy, the maximum payout you’ll receive from your collision insurance is $8,650. In this situation, collision insurance would most likely be a worthwhile purchase. However, if your vehicle is only worth $2,000, the maximum payout would be $650 with the same premium and deductible. In this situation, collision insurance may not make as much sense since you won’t receive a lot of value for the cost of the coverage.

Collision vs. Comprehensive Insurance

Do I Need Collision Insurance for My Auto Policy?Collision insurance covers damage to your vehicle caused by an accident. However, it won’t protect you from damage caused by issues such as fire, severe weather, fallen objects, vandalism or theft. These situations are covered by comprehensive insurance. As with collision, comprehensive insurance generally isn’t required unless you still owe money on your vehicle to a lender or leasing company.

For newer vehicles, it’s common to carry both collision and comprehensive. As your car gets older and its value depreciates, the value of these coverages diminishes. You may decide at some point that it only makes sense to carry one of these coverages. Which should you choose?

When choosing between collision and comprehensive insurance, consider the following factors:

  • Your driving record – If you haven’t been in an accident that was deemed your fault in years, you may want to bet on your driving ability and opt for comprehensive. However, if you find that you’re regularly causing car accidents, keeping your collision coverage may be more prudent.
  • Where you live – Denver typically gets several serious hail storms each year. If you don’t park your car in a garage, you’re much more likely to sustain serious hail damage in one of these storms. Also, do you live in an area that experiences high rates of auto theft? In both of these situations, comprehensive insurance may make more sense.
  • The cost of each coverage – In general, the premiums for comprehensive are much lower than the premiums for collision. If you’re concerned with keeping your monthly insurance costs as low as possible, this may be a factor to consider.

Accurate Auto Body Can Help

If your car has been damaged in an accident, Accurate Auto Body Shop and Collision Repair can help. We provide a comprehensive array of auto body repair services to address all of your needs. We work with all insurance companies, and our team will help you through the insurance claims process if you have collision coverage. If you don’t have collision insurance and play to pay out of pocket, we’ll provide you with customized repair options to accommodate your budget.

When you work with Accurate Auto Body, you’ll benefit from our Focus On You Service System™ which ensures:

  • You’re treated with the highest levels of respect throughout the repairs process
  • You receive guaranteed pricing for your repairs
  • You receive guaranteed completion dates
  • You receive the proper information necessary to understand all of your options
  • You experience faster turnaround times
  • Your vehicle will be fixed right the first time
  • Your unique scheduling needs are always accommodated to the best of our ability
  • Insurance claims are handled as efficiently as possible (we’ll cut through the red tape to get your claim moving along)

Schedule a free auto repair estimate with Accurate Auto Body today. We offer collision repair services in Aurora, Denver, and the surrounding areas of Colorado.

Leave a Reply