Why you should always carry collision coverage and rental insurance, regardless of your vehicle value.

There are four main types of coverages available on automobile liability policies: Collision coverage, which covers for vehicle repairs or total loss, regardless of fault; liability coverage, which pays others when you make a mistake and cause property damage or bodily injury to others while driving; uninsured motorist coverage, which covers you for bodily injury and property damage when another driver is at fault, and fails to have liability coverage of their own; and underinsured motorist coverage, which picks up and covers you, when another driver’s liability insurance is insufficient to cover your bodily injury or property losses.

Collision coverage is optional; and some people elect to not carry when they are driving an older vehicle, for example. But sometimes, that older vehicle is a person’s only means of transportation.

Collision coverage can be especially important to carry, regardless of the value of your vehicle. Collision coverage allows you to go to your own insurance carrier and have your own carrier pay for your property damages, regardless of delays by a liability carrier for the at-fault driver in a collision, subject to your deductible amount. For example, you are in a rear end collision with two vehicles striking each other behind you. The driver behind you claims he was hit first by the vehicle behind him, pushing him into you, and denies that he is at fault. The driver behind him claims that the driver directly behind you hit you first. The collision report prepared by the officer finds one of the two at fault, and there is a dispute about which vehicle is liable.

While the two insurance carriers for those vehicles behind you argue over fault, neither will take any action to adjust your property damage. Your car may be a total loss, sitting in the tow yard; and you have no vehicle to drive while liability is being investigated. They may eventually come to an agreement, or sometimes not; but in the meantime, you are without a vehicle to drive, causing your life flow to be instantly disrupted. Nor will liability carrier issue you a rental vehicle for you to drive.

If you have no collision coverage, then you have no one to turn to for coverage while the liability carriers investigate the claim. In some instances, they may never agree, and your total loss vehicle sits in the tow yard, collecting storage fees, while your attorney files suit against both drivers to have a judge or jury determine who is at fault. If you have collision coverage, you call you own insurance carrier, tell them you would like them to adjust your claim, subject to your deductible amount (usually $500.00). Your own collision insurance carrier will then “subrogate” against one or both at fault parties’ insurance carriers and get its money back through an intercompany arbitration process. Once your collision carrier gets its money back, they will then send you a check for the deductible amount.

Collision coverage will not automatically allow for you to have a rental vehicle; there is separate rental car coverage that you can elect to have on your policy. For the same reasons, rental coverage is a good thing to purchase. These coverages allow you to go on with your life, regardless of circumstances outside of your control in a roadway collision.

So think twice about saving a few dollars a month by electing to not carrier collision coverage.