Collision Insurance: Meaning, Pros & Cons

Collision insurance protects your car against repair costs arising from accidents with another vehicle or object, regardless of fault. Simply put, it covers collision-related damage when you need it most.

Imagine driving home after a long day when a sudden skid or unexpected turn leads to an accident. The shock fades, but the repair bill does not. This is where collision insurance steps in as a financial safety net.

Unlike basic car insurance, collision auto insurance focuses specifically on impact-related damages, making it especially valuable for new or high-value cars. It helps you recover faster, financially and mentally, after an unforeseen mishap.

What is Collision Insurance?

Collision insurance is a specific type of auto insurance that covers damage to your vehicle caused by a collision, regardless of who is at fault. Unlike third-party car insurance, which only protects the other party, this coverage safeguards your own car.

Whether your vehicle hits another car, a tree, a pole, or even a pothole, collision insurance offers financial protection. It can be combined with comprehensive insurance or purchased separately, ensuring repair or replacement costs are covered without heavy out-of-pocket expenses.

For instance, if your car skids on a wet road and hits a roadside pole, collision insurance covers the repair costs, even if the accident was your fault, helping you avoid unexpected financial strain.

How Does Collision Insurance Work?

If your car is damaged due to an accident, collision insurance provides full coverage of the repair costs. Let us find out how this collision insurance actually works:

1. Collision insurance pays for damages caused if your car hits another vehicle.
2. Provides comprehensive coverage for accidents caused by objects such as walls, poles, and trees.
3. Choosing collision insurance is even more helpful if your car hits a pothole or slides on any wet road.
4. You need to pay a fixed deductible amount, and your insurance provides the remaining part.

For instance, the repair bill for your car is ₹60,000, and the deductible amount is ₹6,000. You need to pay only ₹6,000, while insurance covers the remaining ₹54,000 as per policy terms. This way, you can prevent paying the full cost of repairing after your car meets with an accident.

What are the Pros and Cons of Choosing Collision Coverage in Car Insurance?

Pros of Collision Insurance

Saves Money if the Car is New

If you own a new and expensive car, the repair costs tend to be quite high. However, if you have opted for collision insurance, the majority of the repair costs are covered.

Provides a Peace of Mind

Driving is completely unpredictable, and accidents can take place anytime. You might come across a serious situation on the road. In this situation, choosing collision insurance ensures you stay stress-free and without worrying about the financial impact if your car is involved in an accident.

Meet Lender’s Requirement for Collision Insurance

If you are planning to lease or finance your car, most likely you will require collision insurance from your lender. This helps to safeguard their investment if your car is damaged. Thus, go through the contract carefully to meet the lender’s requirements.

Provides Coverage of Many Types of Damage

Apart from car-to-car accidents, collision insurance covers something more. It provides coverage for damage from hitting walls, potholes, poles, and other road hazards. It also covers damage (if any) when you park your car in a parking. Thus, choosing this insurance ensures comprehensive protection for your car.

Cons of Collision Insurance

Costs

The first and foremost reason drivers consider not choosing collision insurance is the cost. The premium amount for your car insurance increases if you purchase it.

The costs, however, depend on several factors that include the value of your car, where you reside, the deductible amount, and your driving record. Prefer to roam around and continue shopping to choose the best car insurance for you.

Not Worth for Older Cars

If you have an old or inexpensive car, paying more for car insurance might not be worthy. If your car value is less than the deductible amount, prefer not to choose the collision insurance. Because you will not receive much payout if there is an accident. It would be wise to set aside the money you are spending on collision coverage each month.

Excludes All Damage Costs

Choosing collision coverage for car insurance is great, but collision insurance excludes coverage for theft, fire, weather conditions, natural disasters, damage from collisions, vandalism, and other causes. A comprehensive car insurance policy covers these damages.

Need Other Car Insurance Types

Opting for collision coverage is optional. You might find it beneficial to choose other mandatory car insurance along with it. Third-party liability with other coverages is mandatory to choose in Canada, though some differences exist between provinces.

Still, you might require coverage for people riding in other vehicles and damage caused to other people's property.

Things to Consider While Buying Car Insurance with Collision Coverage

Here are the things to consider while planning to buy car insurance with collision coverage:

Assess Coverage Needs

Assess your car’s valuation with coverage needs. Then, look into whether your car insurance coverage benefits justify the additional premium payment.

Choose a Plan

If you want to experience the benefits of collision coverage with your existing car plan, go for the comprehensive policy. Whereas, if you already have an existing long-term third-party car insurance, include the standalone OD plan on top to experience own damage car, which includes the collision coverage as well.

Search Online

Go through the car insurance plans available online. Make a thorough comparison of those plans across different insurers to choose the best deal.

Select Deductibles and IDV

The Insured Declared Value (IDV) of your car and total deductibles play a crucial role in claim payout under car insurance collision coverage. Make decisions only after careful consideration during the purchase of a policy.

Plan Review

Once you finish customising your car insurance, go through the inclusions and exclusions under the chosen policy. Make sure it includes its own damage coverage, which covers collision-related incidents as well.

Finish Payment

Once you finish choosing your plan, pay the premium amount online and complete the car insurance purchase with collision coverage.

Bottom Line

A collision car insurance safeguards you financially for your vehicle. Choosing this insurance also helps in managing and repairing costs if there is any unforeseen accident. Familiarising yourself with the collision insurance meaning makes it easier to select the right policy. Collision auto insurance is particularly beneficial for new and financed cars.

For complete and reliable protection, go through the car insurance plans from Bajaj General Insurance. Avail comprehensive coverage today and drive your vehicle with confidence and peace of mind.

Frequently Asked Questions

Is collision insurance mandatory by law?

No, collision insurance is not mandated by law. But a lender might need this insurance if you avail a car loan.

Will I get collision insurance coverage if someone hits my car?

Yes, you will get collision insurance coverage if only the other driver is at fault and insured. Collision insurance works only if the other driver is uninsured or if you are at fault.

If there is no comprehensive cover, will I get collision insurance?

Yes, even if there is no comprehensive cover, you will get collision insurance. But the majority of insurers suggest a combination of two for full protection.

Does collision insurance provide coverage for natural disasters like floods?

No, collision insurance usually doesn't provide coverage for natural disasters such as earthquakes, floods, and typhoons.

Who benefits the most from collision insurance?

Drivers possessing new cars under lease or financing benefit the most from collision insurance. This is because extensive repairs to these vehicles usually cost quite a lot.

What does collision insurance usually cover in a single-car accident?

In any single car accident, collision insurance usually covers the damage caused to your car due to a crash with another object, such as a tree or fence.

Should I opt for collision insurance if my car is old?

No, if your car is old and holds a low resale value, you may not opt for collision insurance. Make sure to look into whether the premium amount for collision insurance outweighs the value of your car.

*Standard T&C Apply

*Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.