What does collision insurance cover?
Collision insurance covers damage to your vehicle from an accident where you collide with another vehicle. It will also cover damage from a single-vehicle accident. Examples of accidents where collision insurance applies include:
- A collision with another car, truck, or van.
- A collision with a building, fence, or pole.
- A rollover accident where no other vehicle is involved.
Collision insurance most commonly kicks in when you are at fault for an accident. It may also apply if you’re not at fault in any situation where there isn’t another insurance policy to cover the damage.
What doesn’t collision insurance cover?
Collision insurance doesn’t cover any non-collision events or damage to any other vehicles or objects. It also won’t cover medical bills for you or anyone else. Additionally, collision insurance doesn’t cover hitting an animal. Here are some examples of what’s not covered by collision:
- The damage to another person’s car, no matter who is at fault.
- Hitting a deer.
- Damage from a storm, like hail or a fallen tree branch.
- Injuries to anyone involved in an accident.
Some of the above are covered instead by liability insurance (injuries to others), and some are covered by comprehensive insurance (other than collision coverage). Make sure you’re aware of the difference between collision and comprehensive coverage; you may need both.
How does collision insurance work?
Collision insurance has a deductible, which is the amount you’ll be responsible for if you file a claim. Deductibles vary, and the higher your deductible, the lower your premiums will be. If you choose a high deductible, make sure you have the savings to cover that amount – insurance won’t kick in until the deductible amount is fulfilled.
When you file a collision claim, your insurance company will pay the repair cost, minus the deductible. When the cost to repair your car becomes too high to be worthwhile, the insurance company will declare it a total loss and will pay out the actual cash valueActual Cash Value (ACV) is the current market value of your car, considering depreciation. It's the amount your insurance will pay if your car is totaled or stolen. (again minus the deductible).
Is collision insurance worth it?
You have to carry collision insurance if it’s required as part of your loan or lease agreement. Other than that, there’s no legal requirement for this coverage.
Once your loan is paid off, you can drop collision coverage from your policy. However, it’s important to be aware that if you drop this coverage, you will be 100% responsible for damages to your car, unless another driver is at fault. If you can’t afford to replace your car, it’s best to keep collision coverage in place.
FAQs
What is collision deductible?
A collision deductible is the amount you pay out of pocket for car repairs after an accident before your insurance covers the rest. For example, if your deductible is $500 and repairs cost $2,000, you pay $500, and your insurance pays $1,500.
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