What does collision coverage insure and how does it differ from comprehensive coverage? When do you need to have collision coverage and when can you drop it?
Making sure you have the right type of insurance for your car is an important way to protect your finances. In the event of an accident, you not only have to think about car damage costs, but also expenses from personal injuries.
While most people know that insurance is required, knowing specifically which type to have can be trickier. Each state has its own laws for coverage minimums, so it’s important to look specifically at the rules in Arizona.
Arizona Car Insurance Requirements
Arizona law requires that all vehicles on the roads have liability insurance coverage through a legally authorized business. Included in their definition of vehicles are golf carts, mopeds, and motorcycles in addition to trucks and cars. Here are the minimum coverage amounts:
- $10,000 to cover damage to property from an accident that the person driving the insured vehicle caused.
- $15,000 coverage for death or bodily injury of one person from an accident the person driving the insured vehicle caused.
- $30,000 for death liability or total body injury in a collision caused by the person driving the insured vehicle.
This level of coverage can pay for bills for property damage, medical expenses, and related costs. It will cover pedestrians, passengers or drivers injured in an accident that you caused up to the limits listed.
What is Collision Coverage?
How does collision insurance work? Collision coverage is meant to pay for the replacement or repair costs in the event of a wreck. Collision insurance isn’t legally required, but if you’re leasing or buying a vehicle, the lending institution may require that you buy both comprehensive and collision insurance.
Collision vs. Comprehensive Insurance
What is the difference between collision and comprehensive insurance? Collision insurance applies to both stationary objects and other vehicles. It can also help if your vehicle is hit by someone who doesn’t have enough insurance to cover the costs. Comprehensive coverage will pay for damages caused by hail, vandalism, theft, and other events (depending on the policy). Let’s look at some example events that each should take care of:
Collision insurance: As the name suggests, collision insurance protects you when it comes to collisions. This may mean your car rolling over or hitting another car, colliding with an object, or running over a large pothole.
Comprehensive insurance: Covers events like a tree falling on your car, natural disasters, a stolen vehicle, or an animal hitting your vehicle.
Many times, comprehensive coverage will pay for events that collision coverage doesn’t. Bundling these two types of insurance together can bring you a lot more protection and, as mentioned, may be required in some situations. Do you need collision insurance if your car is paid off? Usually, you can choose to drop it if you want, once you pay off your loan.
Do I Need Both Collision and Comprehensive Insurance?
When you’re deciding whether to get both types of insurance, think about these four factors first:
1. How much your car is worth: If your car is new and worth a lot, or you’re still paying it off, both types of coverage are important. Even if your lender doesn’t require it, it may still be a good idea to protect your finances.
2. Where you live: Where do you usually drive your car? Are there many incidents of falling trees or wildlife collisions in the area? Where you live also dictates how long your commute is, and more time on the road means a higher risk of accidents.
3. Your financial situation: Do you have enough in your savings to cover an accident? If someone stole your vehicle, would you be able to buy another one?
4. The cost of coverage: If you find a great deal on both collision and comprehensive coverage, it may be worth it to get both. However, if you have accidents on your record, rates could be higher. Think about whether you can realistically afford both types of coverage.
While collision coverage isn’t always required, it doesn’t mean it isn’t still a good idea for you. You’ll also need to think about what’s at risk beyond your car. Getting in an accident can keep you out of work with an injury, meaning you could lose money from missing work and medical bills. If you decide to go without this coverage, try to make sure you could afford to replace or repair your car in the event of an accident.
How Can You Lower Costs?
One way to make collision coverage easier on your finances is to carry the largest deductible that you can afford. If you only plan to use the coverage in the event of major damages, setting your deductible at a higher rate can lower the overall cost.
Should You Get Rid of Collision Coverage?
Some people drop their collision coverage when they’re driving an older vehicle, then put the cash saved into a fund for potential emergencies. But the best way to determine what’s right for you is to crunch your own numbers.
When should you drop collision coverage on your car? Both comprehensive and collision insurance are optional by law, unlike liability coverage that pays for damages you caused. The most reliable way to figure out whether you should get rid of collision coverage is to add up the amount you’d spend on coverage versus the value of your car. Then, you can check and see if it fits your budget.
Have You Been in a Collision in Arizona?
If you’ve been in a car accident in Arizona or have a personal injury from a car accident, seeking legal guidance is a good step to take. Insurance companies will often try to cut costs or offer you less money than you deserve so they can earn a profit. Having a car accident attorney on your side can help you know your rights, clear up any confusion you may have, and get you moving in the right direction.
Call our Personal Injury team at (480) 467-4392 to discuss your case today.