Collision insurance
Most states only require liability insurance to protect others from any damages you may cause while driving. However, liability minimums are not the only useful coverages. If you finance or lease a car, the lender or dealer will almost certainly require you to have full coverage auto insurance, which includes comprehensive and collision coverage. Most insurance companies provide collision coverage as an optional extra.
While collision insurance raises the cost of your auto insurance, it provides the financial protection that most drivers value: coverage for if your car is damaged in an accident. This way, you pay a deductible rather than covering all expenses out of pocket if your car is damaged as a result of a covered claim. What exactly is collision coverage, and is the additional insurance cost worthwhile for you? StrongInsurance can provide you with more information to help you make an informed decision.
What is collision car insurance?
What does collision insurance cover? If your car insurance policy includes collision coverage, it will help pay for the repair or replacement of your vehicle if it is damaged in a car accident. It is especially useful in at-fault accidents, where your liability coverage would only cover the other driver's and their passengers' expenses.
In general, the at-fault driver's property damage liability coverage contributes to the cost of repairs to the other party's vehicle. However, if you were not at fault for the accident, collision coverage may still be useful.
When another driver's negligence causes damage to your vehicle, your auto insurance may help repair it under collision coverage, protecting you from some out-of-pocket expenses while your insurance company seeks reimbursement from the at-fault driver's insurance company. This is useful when the driver's insurance company is slow to respond or when the at-fault driver does not have enough or any coverage. Uninsured and underinsured motorist coverage may apply in some cases, but not always.
What collision insurance covers
In a nutshell, collision coverage is intended to protect your vehicle by assisting you in paying for repairs or replacement if it collides with another vehicle or object. Assume you collide with a curb and damage your tires and bumper. In this case, you are to blame for the damage, and collision insurance kicks in. Collision insurance also covers repairs to your car, even if you were at fault in an accident.
Aside from the two scenarios mentioned above, collision insurance covers damages caused by:
- An accident with another car
- crashing into a tree, fence, or mailbox
- Damage to your car from crashing into road hazards, such as a sign post or guardrail
What collision insurance does not cover
Collision insurance does not cover everything. Here are a few things that are excluded:
- Theft or vandalism damage to your vehicle
- Animal-related damage to your vehicle
- Fire damage to your vehicle
- Natural disaster or bad weather damage, such as hail
The non-covered perils mentioned are covered by comprehensive insurance.
Do I need collision car coverage?
If you finance or lease your car, your lender will usually require you to have collision insurance until the loan is paid off or the leased vehicle is returned.
If you do not owe money on your car, consider how much it would cost to replace or repair it if it were damaged or totaled in an accident. If you do not believe you can afford to repair or replace your car after a collision, having collision coverage may provide you with peace of mind in the event of an unexpected situation. However, if your car is an older model or has significantly deteriorated, you may be better off foregoing the coverage.
How do I purchase collision coverage?
You can purchase collision coverage through most auto insurers when getting a policy. Compared to liability-only insurance, collision coverage is useful because it offers financial protection against damage to your vehicle. Your collision coverage helps pay for repairs or replacement costs up to your car’s actual cash value, which is the maximum amount your policy will pay toward a covered claim. Collision coverage also has a deductible, which you would be financially responsible for in a claim.
For example, if your car has $5,000 in damages covered under collision coverage and you have a $1,000 deductible, you would likely receive payment from your insurance company for $4,000 to cover the repair expenses. This does not mean you will need to write your insurer a check for $1,000. Instead, your insurer will typically subtract your deductible amount from the check it writes you.
As a policyholder, you can pick your collision deductible amount when you purchase the coverage. The lower the deductible, the higher your annual premium. Insurance experts generally recommend choosing an amount you are comfortable paying out-of-pocket after an accident.
Frequently asked questions
What is the difference between collision and comprehensive coverage?
While collision coverage helps cover the costs of repairing your car after an accident, comprehensive coverage helps you repair or replace your vehicle if it is damaged due to something other than a collision, such as hail, flooding, or a falling object. This is also true if your car is stolen or vandalized.
Do older vehicles require collision insurance?
Aside from your state's required minimums, additional car insurance coverages are a personal choice as long as the vehicle is not financed or leased. To provide financial protection for their vehicles, some people choose full coverage, which includes collision and comprehensive coverage. Because older vehicles have depreciated in value, some drivers may find that collision coverage is not as beneficial due to the value of their vehicle and the potential cost of repair.
What if my car is severely damaged?
Collision insurance will pay for repairs to your car resulting from a covered claim, unless the cost of repairing the damages exceeds the value of your car. In that case, your insurance company will typically "totaled" your vehicle and pay you the actual cash value of your vehicle as determined by your insurance company at the time of the claim, minus your deductible. You can get an idea of your car's estimated value by visiting sites like Kelly Blue Book.