What is Auto Collision Insurance?

When choosing auto insurance policies, oftentimes the terminology can be confusing. Many states only require the minimum amount of insurance, which is liability. Basic liability insurance covers the driver to which you cause damage. However, with auto collision insurance your vehicle is covered regardless of who is at fault.

Definition

Auto collision insurance covers your vehicle when your car is damaged by a collision that is your fault or another driver's fault. This type of coverage will pay to fix your vehicle, minus the deductible chosen when the policy was signed. The deductible is the amount of money you will pay out of pocket. Choosing a higher deductible will cause your rates to stay at a low rate. The coverage is limited to the cash value of the vehicle, therefore on older vehicles auto collision insurance is not needed.

Reasons to buy

In many states if your car is leased or you have a loan on your vehicle, then the bank will require you to buy auto collision insurance. Another reason to purchase this insurance is if you have a new car. When you buy a new car, it is in the best possible working shape a car could be in and by purchasing auto collision insurance you are protected if someone doesn't have insurance to cover your costs.

Costs

Costs associated with auto collision insurance will vary per vehicle and by state. Many insurance companies have online websites, which makes it easy for you to get a quote in minutes. Keep in mind while shopping around for insurance that the higher deductible you choose, the lower your rates will remain.