Several types of auto insurance exist, and the law doesn’t drivers to have them all. Collision coverage is optional for cars already paid off but is useful in tight circumstances.

What Is Collision Coverage?

Collision coverage helps shoulder the damage to a driver’s vehicle who’s at fault in the event of an accident, whether with someone else’s vehicle or with an object. The law requires a driver to have liability, which only helps pay the victim. Without collision, the insurance company won’t cover the repair or replacement of the vehicle for the driver at fault. Most of the time collision coverage is mandatory for financed or leased cars but is otherwise optional.

Who Benefits From Collision Coverage?

Fundamentally, accident-prone drivers with expensive cars may reap greater rewards from collision coverage than a more careful driver. However, this coverage could increase monthly payments, which could get expensive. The Insurance Information Institute cites the average cost for collision coverage as $290 per month. A safe driver could save money with a higher deductible.

What Else Does Collision Cover? 

Collision covers pothole damage, as well as any parking lot damage. It also kicks in if the driver loses control and flips the car over. However, it isn’t a license to attack trees or other cars. Collision won’t cover health bills or non-driving-related incidents, such as hail or theft.

Is Collision Coverage Always Necessary?

Knowing if collision coverage is needed depends on how much the car is worth. Insurance companies offer deductible rates which correlate with monthly premiums, thus a lower deductible will get a driver higher premiums. In other words, a $1,000 deductible may not be necessary on a car worth $800. 

Most of the time, the amount of money that collision insurance offers is the cash value of the car. If a driver totals a car, the insurance company would pay the owner for the car’s current market value. 

What Other Types Of Coverage Are There?

Comprehensive is another type of insurance, which covers damage from non-driving-related incidents like fire, riots, and vandalism. Drivers only need liability to drive a car on the street, which only covers the driver-at-fault. Liability is good to have for when an accident victim claims personal injury.

Any damage caused by driving is covered, but only up to a certain amount. If the car is not worth the deductible, then collision could cost more than the car’s value. The owner’s driving habits and the car’s value help determine if collision coverage is necessary. Opting out is always an option on a car that’s already paid off.

RELATED: Is GAP Insurance Worth Buying?