Collision coverage is designed to protect you against damage to your vehicle regardless of who is at fault. Like with comprehensive coverage, collision coverage is almost always required for motorists leasing or financing, but for car owners it is typically voluntary.

If you happen to get into an accident, and you have a policy with collision coverage, your car will be protected if you are at fault. Hypothetically, if someone stops short and you run into her, your collision coverage will pay for the repairs to your car, while your property damage liability will pay for hers. But, what you will actually be paying is all in relation to your deductible.

Having a high deductable will get you cheaper collision coverage, but it will leave you at risk for paying a lot more out of pocket if you do need to cash-in on your collision coverage policy.

Deductibles can be a little tricky to understand, but what they do is set a benchmark for what the insurance company is willing to pay in the event of an accident. The lower the deductable, the more the insurance provider will have to pay, and because small low-cost accidents are much more frequent, a low deductable on your collision coverage policy is more expensive. High deductibles are designed to protect you against expensive accidents like one where your vehicle is deemed “a total loss.” Collision coverage with a high deductable is much cheaper, because it’s much less likely that you’re going to total your car.

For example, if you have a deductable of $1,000 and you bump into someone causing $1,500 worth of damage to your car, your collision coverage will only pay for $500 of the repairs, leaving you with the greater portion of the bill.

This is why collision coverage is so valuable for motorists with newer and better condition vehicles, because they are more expensive to fix.

Collision coverage is also extremely valuable for car collectors who have vintage cars, which may have parts that are more exotic or out of production and thus much harder to find and more expensive to acquire.

Repair costs for older and/or poor-condition cars is generally cheap enough not to need collision coverage, because the annual amount you’ll have to pay to add collision coverage to your policy is likely to be more expensive than the amount you’ll end up paying for repairs in a year.

—AJ Register