Collision Insurance

You have collision insurance if you have purchased All Perils or Collision coverage on your vehicle policy. You look at the policy form and check under Section C to see if it shows a deductible amount relating to that vehicle. It will also show a premium. It is not Comprehensive or Specified Perils.

Collision insurance covers impact with another vehicle, a post, the highway road bed, or almost any other object. This optional type of automobile insurance coverage pays for the cost of repairing that particular vehicle if it is damaged in an upset or collision.

Collision or All Perils insurance is not mandatory. If you have a lease or a lien on your vehicle then you are likely required to carry this type of coverage by the lender or the dealership. Usually the maximum deductible allowed in this situation is $1000.

Yes, it is true that the higher the deductible, the lower the premium you pay. It usually saves about 17% of premium to go from a $500 to a $1000 deductible. Is it worth it to you? Be aware though that the deductible is the amount you share in the loss. So if you are in an accident and your collision coverage has to payout to repair your vehicle then you will pay the deductible. If you have a higher deductible then you can afford to pay then your vehicle will sit until you can get the money together.

The insurance company is not going to pay for a rental once everything has been decided. Once all is agreed as to how to proceed you will have to return the rental vehicle and find alternate transportation. If you are a single mother who depends on her car to get to the job then you need to consider carrying collision coverage as part of your income protection.
Be aware that if you choose to drive without collision coverage then you will also lose the insurance company's help if you are hit by another vehicle. The insurance company adjuster will say, "we have nothing to defend". Your insurer will be there for you in regards to your injury but not for the damage to your vehicle.

Some commercial policies carry a high deductible collision coverage which is quite inexpensive just so that they will have the insurance company defending their interests at the time of an accident. When you think of the actual costs of an accident you need to consider if you have the time to spend dealing with the other person's insurance company and possibly gathering the necessary information from the police. You need to at least check and see what the different costs will be.

There is also the opportunity to choose to insure your vehicle for collision on a seasonal basis. The winter months are much higher risk for having an at-fault accident. Perhaps your answer to this insurance question is to insure your vehicle for collision for only half the year and pocket the savings during the lower risk time. Talk to your agent or broker about what works best for you.