Collision insurance is a coverage that helps pay to repair your car if it is damaged in an accident or with another vehicle or object. This coverage is usually not suited for older vehicles. It is also often referred to as “full coverage insurance”. Collision insurance is not required by state law to carry when driving a vehicle. If you are financing your vehicle this coverage will be required with your finance company. If it is not financed then the coverage would be optional. Even though your car may be paid off if the value of the car is high enough it could still be in your benefit to carry collision insurance to protect yourself in the event of an accident.
Do I need collision insurance?
If your car is financed the lienholder will require you to carry collision insurance. If you fail to carry collision insurance the lienholder can put “forced place coverage” onto your car payment which can be very costly. This is not true state required insurance but just a collateral protection to protect the finance company. There is no liability coverage on this forced place policy which is what the state requires you to carry. If you were to get pulled over carrying only forced place insurance your license can be suspended due to not carrying the state minimum limits of liability insurance.