Collision coverage is part of the standard insurance coverage that is provided for automobiles and other forms of transportation where there is the chance of an accident involving another mode of conveyance or the insured vehicle striking a stationary object. Collision coverage is understood to provide resources to repair the insured conveyance, but does not extend to covering medical and other expenses related to drivers and occupants of the vehicle. Generally, collision coverage provides a limited amount of protection, less any deductible that is specified by the policy.
Collision insurance was once considered an optional coverage for auto insurance policies. However, since the latter part of the 20th century, more jurisdictions have made it necessary for persons to carry full auto insurance, including a collision coverage component. In some cases, the vehicle owner cannot renew the tag without presenting proof of insurance coverage that is at least equal the minimum requirements set by the jurisdiction. If the driver is caught operating the vehicle without carrying the minimum amount of insurance, he or she may be fined or lose driving privileges for a period of time.
Collision coverage helps to protect the insured party in the event of an accident of some type. The focus of this type of coverage is on repairing the insured vehicle. This means that collision coverage does not provide any type of compensation when it comes to damage to property or to any other vehicle involved in the accident. However, collision coverage will provide resources to repair the insured vehicle regardless of who was at fault for the accident.
Depending on the insurance carrier and the amount of coverage desired, the collision coverage may have a small deductible or a large one. Generally, persons who drive older vehicles with a reduced Blue Book value may opt for higher deductibles, since there is a greater chance that an older vehicle will be declared totaled by the insurance company. Newer vehicles usually benefit from lower deductibles, since there is a greater chance that the vehicle will be cleared for repair by the insurance provider.
In recent years, car dealers and financial institutions that extend car loans tend to require that the owner obtain and keep full auto protection for as long as the loan remains outstanding. In some instances, the bank or finance company may require that the owner submit documentation to prove that the vehicle is fully insured, including a collision coverage component, before allowing the consumer to take possession of the automobile.