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In this part of the ongoing Tennessee automotive insurance series, I’ll take a closer look at collision coverage.

Collision insurance protects the insured’s vehicle in the event of an accident (collision), regardless of who is at fault. Usually insurance companies will even pay for expenses resulting from the accident, such as towing and storage. In accidents where the damage is severely damaged, the insurance company may deem it cost-effective to “total” the car, salvaging it and writing the insured a check for the fair market value of the vehicle. This value is the estimated value of the car before the accident.

In less severe accidents, collision insurance will pay for the repairs to the insured’s vehicle. Often times though, the vehicle will be worth less after the crash, even with high quality repairs. This is because the crash will be recorded on services like CARFAX, often making the vehicle less appealing to buyers. Some believe the value of the vehicle can diminish much as 18%. Insurance companies will rarely willingly compensate the insured for this loss in value, but in more expensive vehicles this diminished value can be a significant dollar figure. This is another instance where having a savvy attorney who knows the business will come in handy.

So the final question remains: Is collision insurance required? The answer is, maybe. There is no law in Tennessee requiring motorists to purchase collision insurance. However, banks require collision insurance on vehicle purchases they finance. This means that as long as you are making car payments on your car, you are more than likely required to have collision insurance.

Collision insurance makes sense for expensive vehicles, whether financed or not. For those who are driving vehicles only worth a few thousand dollars (and is not financed), they must decide if collision insurance is worth it to them.

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