Q: How Does Collision Coverage Work?
Collision coverage is an optional insurance coverage in Georgia that pays to repair or replace your vehicle, less a deductible. You pick the amount of your deductible when you purchase this coverage. Collision coverage works regardless of who is at fault for the accident.
What Does Collision Insurance Cover?
Collision coverage will pay for damage to your vehicle if you are at fault, even in a one-car accident. For example, if the roads are slick and you slide into a stop sign, your property damage liability insurance will not pay for your car repairs (your liability coverage covers property damage you cause to other parties), but if you have collision coverage, it will pay to repair or replace your car if it is a total loss.
If you are at fault for a wreck with another vehicle, your property damage liability coverage will pay for the other party’s car repairs or replacement, and your collision insurance will repair or replace your vehicle.
Should You Buy Collision Insurance?
You might already have collision insurance if you make car payments or are leasing your car because the finance companies may require you to carry it.
Compare the expense of the collision coverage to how much you would have to spend to replace your vehicle with a similar one. If for example, you are insuring an old car worth only $1,500, you might not find the extra coverage worth it. On the other hand, if you have a $30,000 car, it may be worth it to add collision coverage to protect you in the event of a wreck.
Is There a Rule of Thumb for When to Buy Collision Insurance?
CarInsurance.com recommends that you buy collision insurance if:
- Your car is under 10 years old, or
- Your car is worth more than $3,000, regardless of age, or
- Repairing or replacing your car is not financially feasible for you.
Is There a Rule of Thumb for When to Drop Collision Insurance?
The same experts recommend that you think about dropping your collision insurance if your maximum possible payoff (the full value of your car minus your deductible) is not more than 10 times the cost of your annual collision premiums. In other words, it may not be worth it to pay $300 in annual premiums for an older car that has a maximum possible payoff of $2,500 (full value of the vehicle is $3,000, and the deductible is $1,000). You should not, however, drop collision coverage until you have paid off your auto loan.
Another rule of thumb for dropping coverage is to add up the cost of your comprehensive and collision coverage and your deductible. If the total is higher than what your car is worth, it may be time to drop the extra coverage. For example, if your combined collision and comprehensive coverage cost $500 a year, and you have a $1,000 deductible on an old, high-mileage car that has been in car accidents, the Blue Book value of the vehicle might be below $1,500. If so, it may not make financial sense to carry collision.
If you suffer injuries in an accident that somebody else causes, call the Law Office of Jason R. Schultz, P.C. at 404-474-0804. We will evaluate all available coverage and help you file the appropriate claims to recover compensation.