While the law requires all drivers to carry liability insurance, there is no law that requires you to purchase additional types of coverage such as collision insurance. Since this coverage is completely optional, many car owners struggle to determine whether or not they should purchase collision coverage. If you have found yourself in this same position, taking a moment to ask yourself the questions outlined below can help you to determine once and for all whether or not collision auto insurance is right for you.
What Is The Current Resale Value Of Your Car?
Perhaps one of the most important things for you to understand about collision auto insurance is that no matter how much coverage your policy offers, this policy will never pay out more than your vehicle is worth at the time. This is because if the damage to your vehicle exceeds the current value of the vehicle, the insurance company will declare the vehicle a total loss and issue payment for the value of the vehicle at the time it was totaled. Consequently, it is very important to consider the current value of your vehicle versus the cost of purchasing collision insurance. The more value your vehicle has, the more likely you are to benefit from adding collision coverage to your current auto insurance policy.
Can You Afford To Repair Or Replace Your Car Without Help From An Insurance Payout?
Another important factor you will need to consider is your financial ability to repair or replace your vehicle in the absence of collision insurance. If you have the financial means to make any necessary repairs or to purchase a new vehicle if yours is damaged in an accident, you may choose to leave collision coverage off your policy in order to enjoy a lower monthly premium. However, if you do not have the means to cover these costs on your own, you may find that paying a few extra dollars a months to ensure you are covered is well worth the investment.
Do You Currently Owe A Balance On Your Vehicle?
If you are currently leasing or financing your vehicle, you may find that the financing company requires you to purchase collision coverage in addition to your liability insurance. However, even if you are not required to purchase this type of coverage, you will likely find that it is in your best interest. This is because in the event of an accident your collision coverage will take care of any remaining balance you have on your vehicle up to the current value of the vehicle. This can prevent you from being left paying for a vehicle that you can no longer drive.Share