Collision coverage is a specific type of car insurance that covers any repairs necessary on a damaged vehicle. If you are involved in an accident, whether or not it is your fault, your collision insurance can be applied to pay for the full cost of the repairs needed, minus your deductible. When buying a new car, purchasing this type of insurance along with the minimum level of insurance required in your state is highly recommended. For older vehicles, however, it may be in your best interest to decline collision coverage to save money.

Since vehicles depreciate in value over time, the value of your collision coverage also depreciates. Collision coverage will cover repairs up to but not exceeding the worth of your car. If you are in an accident in your 15 year old car that is worth $2,000, but the cost to repair the damage is $5,000, you will only receive $2,000 from your insurance company. It is then up to you whether you want to shell out the addition $3,000 to fix your car or whether you want to look for a new one.

When the cost of repairs exceed the value of the car, it is declared a total loss and you will only be paid what the car itself is worth. It therefore may hurt your finances more than help to continue paying for collision coverage every month on an older vehicle.

Modifying Collision Insurance for Older Vehicles

If your car is older but is not quite an “old clunker”, you can modify your collision coverage to make it less expensive without dropping it completely. Consider raising your deductible, which is the money that you would pay for repairs before your insurance company covers the rest.

With a higher deductible you will pay less in monthly premiums. This way, if you don’t have an accident, you have affordable collision coverage. If you do have an accident, you will have to pay more out of pocket for repairs but will still be covered for the remainder of the cost by your insurance.

Contact Us

To learn more about the types of auto insurance available to you, including collision coverage, please contact a friendly Chicago car insurance expert of Insure on the Spot today at 773-202-5060.