Collision insurance is a type of vehicle insurance that protects vehicles against repair costs resulting from a collision or an accident. It is usually an added coverage to the basic motor insurance policy and will likely have to be purchased separately. The decision to purchase collision insurance is sometimes a personal choice, and knowing the pros and the cons of purchasing such a policy is useful for anyone considering such insurance protection.

The need to obtain collision insurance

First of all, determine whether state law, the auto loan lender, the bank or the leasing company requires collision insurance as part of the lending agreement. In most instances, these lenders require collision insurance in order to protect their interest in the event of an accident involving their investment. If so, comply with the agreement and purchase an auto policy from an insurer. However, if no such obligation exists, the decision is open.



Pros of having collision insurance

On the plus side, collision insurance does allow claims for repair costs in the event of accidental vehicle damage. In general, the collision coverage will take care of the entire repair cost, whether it is minor or a major repair. Thus, having collision coverage will allow drivers the peace of mind that their vehicle investment is relatively safe. At the same time, having such coverage prevents the need to use savings in the event of such damage repair.


Cons of having collision insurance

On the negative side, according to MSN Money, obtaining collision insurance sometimes  means  enduring a relatively high premium in relation to risk. However, there is a chance that a policy holder might not use collision insurance ever, especially when they are a careful driver or if the vehicle is hardly used.

Even with collision insurance, a policy holder often has to pay a considerable deductible before the company pays the remainder for repairs. This would mean that if a car is not worth much and has a high deductible, then the amount paid by the insurance company for repairs would be much less. Thus, in such a situation, it may be of greater benefit to pay for collision repairs with a savings account.

The decision to obtain a collision coverage may differ based on personal requirements, ability to sustain the losses of an accidental damage, the value of your vehicle and obligations to lenders. At the same time, after considering all these facts, if it is necessary to obtain insurance, seek guidance from an insurer regarding the inclusions, exclusions and the process of claiming and payments related to such coverage before making a final decision.