It’s common knowledge that vehicle owners in Illinois are required to carry a certain amount of liability auto insurance, but you may be wondering if you also need collision coverage. Collision coverage is one of the most important types of car insurance because it can help you avoid a major financial loss if you cause an accident. Check out this comprehensive guide to find out how collision coverage differs from liability insurance and whether it’s mandatory in Illinois.
What Is the Difference Between Collision Coverage and Liability Coverage?
While they’re both included in a comprehensive auto insurance policy, collision coverage and liability coverage are two distinctly different types of insurance. Collision coverage helps pay the cost of repairing or replacing your car in the event that it’s damaged or totaled in an accident you cause. Additionally, it protects you in a single-vehicle collision, meaning it covers damage to your car if you hit a fire hydrant, lamp post, or mailbox. However, collision coverage doesn’t cover damage or loss that isn’t related to driving, such as flood damage and theft.
Liability insurance, on the other hand, pays for the damages the other motorist sustains if you’re responsible for causing the accident. It covers the motorist and their passengers’ medical bills and the cost of repairing their vehicle. If you’re the at-fault party in an accident, this type of insurance doesn’t provide you with any financial assistance, but it can protect you from financial loss and legal trouble.
Is Collision Coverage Compulsory in Illinois?
No, you don’t need to have collision coverage to drive lawfully in Illinois. However, when you apply for auto financing, your lender will require you to obtain full coverage, which comprises comprehensive coverage and collision coverage. This is to ensure that they’ll be able to get back the money they lend you if your car is badly damaged or totaled in an accident. If you’ve already paid off your car, then you have the option to skip collision coverage.
While it isn’t mandatory in any state, collision coverage is an important coverage that’s worth getting. If you only carry the state-required liability insurance, you have to be prepared to pay for repairs out of your own pocket if your vehicle sustains damage in an accident that’s your fault. In some cases, repair costs can run into the thousands and put a major dent in your savings. There’s also a chance that your car may be damaged beyond repair, which means you have to buy a new car while still paying back the loan on the old one.
What Exactly Are the Auto Insurance Requirements in Illinois?
According to its Mandatory Insurance Law, Illinois requires owners of all vehicles registered in the state to carry liability insurance. The minimum amount of coverage you need to have is as follows:
- $25,000 for one person’s injuries or death in an accident that’s your fault.
- $50,000 for every person’s injuries or death in an accident that’s your fault.
- $20,000 for damage to another person’s property in an accident that’s your fault.
This basic liability insurance covers the medical bills, property damage costs, and other expenses of motorists, passengers, and pedestrians who sustain injuries or vehicle damage in an accident you cause, up to the coverage limits. You may want to carry a higher amount of coverage in case you get involved in a severe crash that leads to significant injuries and vehicle damage. It’s important to note that you’ll be personally responsible for paying the victims’ remaining expenses once the policy limits are exhausted.
Your liability insurance will also apply if the person driving your vehicle is one of your family members or someone else who has gained your consent to use it. In some cases, it’ll also protect you in the event that you cause an accident while driving a rental car. The great thing about getting liability insurance in Illinois is that it includes uninsured motorist coverage, which comes with the same limits as your injury liability coverage.
Bear in mind that you’ll face a minimum fine of $500 if you’re caught driving a registered vehicle without liability insurance in Illinois. Also, if you operate a vehicle that has a suspended registration because of a lack of insurance, you have to be prepared to pay a fine of at least $1,000. Still, these fines will probably pale in comparison to the financial loss you’ll suffer if you get into an accident without insurance.
How Do You Determine Whether You Should Get Collision Coverage?
If you own your vehicle outright, you may find yourself wondering whether you should purchase collision coverage. You can make the right decision by taking the following factors into consideration:
- Value of your vehicle: As your vehicle undergoes depreciation over time, collision coverage will become less valuable. This is because the amount it pays out will never exceed your car’s value. If you have an old vehicle with high mileage, your maximum payout will likely be very low and not worth the insurance cost. On the other hand, if you own a new car or a luxury vehicle that has expensive parts, you’ll be better off getting collision coverage.
- Deductible: The maximum payout of a collision claim is the current value of your car minus your deductible and insurance premium. If you pay $200 every six months and you opt for a $1,000 deductible, your coverage on a $4,000 vehicle will only pay out $2,800 at the most. In this case, it isn’t very beneficial to purchase collision insurance.
- Your accident risk: Evaluating your driving history can help you determine the likelihood that you’ll make a collision claim in the future. If you drive your vehicle a lot or have been in a number of accidents in the past, you may want to think twice about skipping collision coverage.
Whether you want to purchase collision coverage for financing purposes or additional peace of mind, you can count on American Auto Insurance to give you the best possible deal. Contact us today to get a free collision insurance quote.