Before you drop collision coverage on that old beater, read on.
What is collision coverage?
Collision coverage is coverage for your car when it is involved in an accident with another vehicle or a stationary object. It’s typically another car that you’ll hit, but trees, light poles, and guard rails are stationary objects that get hit. It covers the cost of repairs or replacements to your own car. Your liability coverage covers damage to the other person’s vehicle or property.
But my car’s worth little to nothing, why would I carry collision coverage?
While it may be tempting to drop collision coverage on the old beater it may not be the best idea. Here are a few reasons why:
1. You need a vehicle to operate daily. If you can’t afford another vehicle if your current car is a total loss, you definitely need collision insurance.
2. It gets very affordable. The older the car the lower the value. This typically translates to premiums being less than you think.
3. You’ll typically forfeit rental car reimbursement and roadside assistance coverage options when you drop collision coverage.
4. The parking lot scenario. He said she said could cost you. See below.
The Parking Lot Scenario – Don’t end up in court.
You’re backing up in a parking lot when you hit another car. The other driver was also backing up. Commonly the fault in this accident would be shared. But the other driver tells her insurance company that she was parked and you hit her. You tell your insurance company that both vehicles were moving when they hit so liability should be shared. Neither driver carries collision coverage. He said, she said.
The other driver reports the liability claim to your insurance company for damaging her car. They call you for a statement. You tell them both cars were moving. Your insurance company denies her payment as her insurance company should pay the claim. Her insurance company denies the claim because she doesn’t have collision insurance.
She files a claim against you in small claims court. The judge determines you are at fault and orders you to pay for the damage to her car. With collision coverage each insurance company would pay to fix the insured's vehicle and proceed to arbitrate to determine percentage of fault. Collision premium or small claims court judgement? I’ll pay the premium.
Parking Lot Tips:
1. Typically the police won’t come to a parking lot accident unless someone is injured. If you have an accident are able to get them to come and give a police report, this will be very helpful.
2. Go slow. Slower than you think you should.
3. Pull through to a spot or park further out in the lot. You’ll be out of the commotion and have full visibility when you are exiting your spot.