Collision insurance pays for damage to your car compared to compulsory liability insurance

Imagine you park your car outside a shop, go shopping and come back to find that someone has backed into it. And of course he drove off! Or you walk up to your car in the morning and are horrified to see that the windows are broken, the wheels are gone and there’s a brick lying next to it. What now? That’s where collision insurance comes in – a car insurance policy that will not only save your wallet, but your peace of mind too.

What’s the difference between breakdown insurance and third party insurance?

Every driver needs to have car insurance, specifically third-party insurance, which covers damage if you cause something to someone else. It is a kind of protective shield for other road users. Yeah, but what about your car? If you get hit and run, compulsory insurance won’t help you. That’s where a car insurance policy comes in, which protects your vehicle directly.

Collision insurance is a voluntary form of insurance that protects your car from various risks such as crashes, theft, and vandalism. Unlike compulsory liability insurance, which only covers damage that you cause to other road users, breakdown insurance protects you and your property directly.

The Motor Third Party Insurance Act makes it compulsory to have compulsory third party insurance. However, collision insurance is not compulsory, although in some cases it becomes a condition of the contract – this happens, for example, with leased cars.

Put simply:

• Compulsory third party insurance – covers damage you cause to someone else.
• Collision insurance – covers damage you cause.

If you want to have peace of mind and not worry about who damaged your car, collision car insurance is the way to go.

What is covered by breakdown insurance?

Collision insurance is pretty much comprehensive car insurance because it doesn’t just protect your car in the event of a crash. Collision insurance can also cover other damages that can cause costly repairs or complete loss of your vehicle.

Depending on the extent of coverage, there are different variations of collision insurance:

• Crash insurance: Covers damage to your own vehicle in an accident.
• Theft insurance: protects you if your car or parts of it are stolen.
• Vandalism insurance: Covers damage caused by deliberate damage (e.g. scratching the paintwork with a key).
• Insurance against natural disasters: Covers damage caused by hail, flood or tree fall.

So imagine, for example, that you arrive at your parked car from a day of skiing to find that an avalanche of snow has fallen from the roof onto your bonnet. Do you have car insurance? Then you’re safe. Without it, you’d have to come up with a nice chunk of change for repairs and maybe even a tow.

What can’t collision insurance help you with?

But even collision insurance isn’t foolproof. Again, there are situations where your car insurance company won’t pay out on this policy. This is, for example, for damage caused by injury (i.e. if you drive under the influence of alcohol). Normal wear and tear on the vehicle is also not covered by collision insurance, nor is negligent damage to the interior. Yes, spilling coffee on the seat and damaging the upholstery is not a reason for the policy to pay out. At the same time, keep in mind that setting your own car on fire or other intentional damage, for example, really isn’t worth the cost. Damage caused intentionally is also not covered by insurance companies.

How much does collision insurance cost?

Collision insurance prices vary depending on several factors. The first is the age and value of the vehicle. Logically, newer and more expensive cars also have higher premiums. A luxury SUV will have a more expensive policy than a regular small hatchback.

Next, where you want to park your car plays a role. Cars garaged in the family home have lower premiums than those parked on a housing estate because they are generally better protected from theft, vandalism and adverse weather conditions.

Deductibles also come into play. Because the higher the deductible you choose, the amount you pay yourself in the event of a claim, the lower the premium itself will be.

Finally, insurance companies also take your driving history into account. If your record shows that you’ve hit a deer, crashed the car in front of you at traffic lights and backed into a street sign, insurers will view you as a higher-risk client, so your car insurance will cost you more.

How do you choose the right car insurance policy?

When choosing breakdown cover, be careful about what all the insurance covers. Some people need to protect their car from hail, while others have a higher risk of theft. Either way, make sure the insurance covers all the situations you need. Also think about the deductible. The higher you set it, the lower the premium you’ll pay. However, you need to take into account that in the event of a loss, you’ll pay that much more out of your own pocket. Here, it is up to each person to decide which risk they find more acceptable. Also look at the assistance services offered. Good breakdown insurance should provide you with towing in the event of an accident, on-the-spot repairs and ideally a replacement car until yours is fixed.

Various comparison sites can help you choose, some insurance companies have better assistance, others have higher benefit limits.

Is collision insurance worth it?

Car insurance is not something that can be generalised. Everyone has to decide for themselves whether they want car insurance. If you have an older car worth 50,000 crowns, you probably won’t find collision insurance completely worthwhile. Repairing such a car will often work out cheaper than the premium over several years. But if you drive a new car or lease a car, then car insurance is definitely a smart investment.

Collision insurance in practice

An interesting legal case related to collision insurance comes from 2018. At that time, a luxury BMW vehicle went missing in Prague. The owner had taken out accident insurance and expected the insurance to pay out after reporting the claim. However, the insurance company refused to pay out the policy, saying it suspected insurance fraud.

The case went all the way to court, which had to assess whether the owner had actually had the car stolen on purpose or was the victim of an organised gang who stole vehicles on commission. After an evidentiary hearing, the court ruled that the theft was not a sham and the insurance company had to pay the owner the full insurance claim. Thus, as you can see, insurance companies try to minimize the risk of fraud, so they may dispute the payment of the policy.

Collision insurance is not only about peace of mind and protecting your car, it is also about fairness when dealing with claims. The case of the stolen BMW shows that the insurance market is complex, and it is not always easy to get justice. That’s why it pays to have good insurance and know what your rights are.

Whether you’re driving a family car or a sports car, car insurance can save you a lot of money and nerves. So if you don’t want to check your car out of the window every night, it might be time to think about good breakdown insurance.

Summary

Collision insurance, unlike third party insurance, covers damage to your own vehicle – whether due to an accident, theft, vandalism or natural disasters. The law does not make it compulsory, but it is often a requirement for leased cars. The cost of insurance depends on the age and value of the car, where it is parked, the deductible and your driving history. When choosing, it is important to look at the range of cover and assistance offered. Insurance companies scrutinise claims carefully to prevent fraud, as the 2018 BMW theft case shows. Therefore, collision insurance is not only a protection for your assets, but also a guarantee of peace of mind.