Most people will almost never purchase collision-only insurance. The laws of every state require car owners to prove that they have liability insurance before license plates can be purchased. However, there are some good reasons that you will want to make sure that you have collision insurance.
Collision insurance will pay to have your car repaired.
If you are in a car wreck, your car will need repairs or replaced. If you are not hit by someone who has liability insurance, you will need collision insurance to cover your losses. After your deductible and possibly depreciation, collision insurance will pay to either repair or replace your car.
You need collision insurance to cover a car that you rent.
When you rent a car, you are required to prove that you have collision insurance to fix the car in the event of an accident. Without this type of coverage, you will have to buy the insurance from the car rental company. While it is not too expensive to buy for a few days, it is very expensive insurance. If you plan to rent the car for very many days, the cost can be quite high.
To protect a car that you are not currently able to drive, you need collision insurance.
If you have a vehicle that is out of service, you may be tempted to drop all of the insurance on the car. However, if it is hit by a hit and run driver or rolls into something and gets damaged, you will need collision insurance to repair it. If the car is not being driven, the cost of the insurance is quite low.
When you drive a car belonging to another person, you need collision insurance.
While the owner of the vehicle should have full coverage on the car to protect them against a loss, it may not legally protect you. The own may still expect you to pay for any damage that you cause to the car. By purchasing collision insurance, you can protect your finances while you are using another person’s car.
You need collision insurance to pay off outstanding debt against the car.
Many new and late model cars have an outstanding loan against them. If the car is totaled in a wreck, you will need collision insurance to help you pay off the loan. While most car loans exceed the value of the car in the first few months of ownership, collision insurance will pay off most if not all of the outstanding debt.
Banks and lenders require you to have collision insurance to grant you a loan.
Because cars stand as collateral for loans, banks and other lenders have to protect their financial interests in your car. To do this, they often require you to prove that you have collision insurance on the vehicle. The insurance company is required to advise the bank if the insurance is allowed to lapse. At that time, the bank will add the cost of a high priced collision policy to your loan payment amount. It is always cheaper to keep your own collision insurance in force.
You may choose to buy collision-only insurance on an expensive car if you can provide enough assets to satisfy your state’s liability insurance requirements without insurance.
If you are extremely well off, you may be able to qualify to use your personal wealth in place of liability insurance to satisfy your state’s car insurance requirements. However, it is possible that you have enough value in your fleet of expensive cars that it would be wise to buy collision only insurance to protect your investment.
If you never drive the vehicle on public streets, you may be able to buy collision-only insurance.
Farm vehicles and other vehicles that are never licensed or driven on public streets do not have to be insured. You may find it important to still protect the value of these vehicles with collision-only insurance. This type of coverage will take care of the costs that may be incurred if you wreck the vehicle while using it.
Collision-only insurance may be the right choice if your car is being used by another person who provides the liability coverage on the vehicle.
There are times when someone will make a semi-permanent loan of a car to someone else. The other person will need to keep the car insured with a liability policy to meet the state requirements. However, it would be in your best interests to maintain a collision-only policy to repair the car if it is in an accident.
Buy collision-only insurance when your vehicle is being transported and could be damaged in an accident.
While you will want to read the fine print to make sure that your car is covered, you will want to have collision insurance on a car that you are shipping across country. The carrier should have insurance to cover this loss, but it may not be sufficient to pay you the worth of the vehicle. Having your own collision policy in force is the only way to be sure that your assets are insured.