When it comes to auto insurance, collision coverage is often seen as a must-have. After all, it pays for any amount that exceeds the other driver's liability coverage in the event of an accident. Lenders and rental companies typically require drivers to have collision insurance, as it can be difficult to cover the costs of repairing or replacing a vehicle without it. But is collision insurance really necessary?The answer depends on several factors, such as where you live, the value of your car, and your financial situation.
Generally speaking, if you're leasing or financing your vehicle, you'll need to have comprehensive and collision coverage. On the other hand, if you're the type of car owner who plans to keep their car in circulation for more than a decade, you may want to consider the cost of collision and comprehensive coverage over several years. And if you're a new car owner and have the financial resources to buy a new car if needed, you may not need collision and all-risk coverage. It's important to note that there is no real type of policy known as “full-coverage auto insurance”. The term generally refers to an auto insurance policy that includes liability, collision, and comprehensive insurance.
Losing collision coverage or comprehensive coverage could expose you to problems such as car accidents, car thefts, acts of vandalism, floods and fires. Collision insurance is not required by any state law, but most landlords and lenders require drivers to have it until the car is paid for. Dealers who rent cars and trucks typically require full-coverage auto insurance, including collision coverage and comprehensive coverage. When deciding whether or not to cancel collision insurance and all-risk coverage, it's important to weigh the possible insurance payment in the event of a collision or comprehensive claim. It's also important to evaluate the value of your vehicle from an insurer's perspective rather than your own. Ultimately, whether or not you need collision insurance depends on your individual circumstances. If you're unsure about what type of coverage is right for you, it's best to speak with an experienced auto insurance agent who can help you make an informed decision.