Collision Coverage: Is Collision Coverage Mandatory for a Financed Vehicle?

While most states require you to purchase insurance, few require collision coverage.   Your lender, however, might require you to carry collision coverage as part of their agreement to finance your car.  You need to check your contract to determine whether or not that was a requirement for financing.  If not, then it is entirely up to you.  Generally speaking, it is a good idea to carry collision coverage on a car that is relatively new—say, 5 years old or newer—because repairs can be quite expensive.  While your car still has quite a bit of its value, you would want to repair it if it is damaged.  Once it is older, it becomes less and less worth it each year to pay the high premium for collision.