IN PLAIN ENGLISH

What is collision coverage in auto insurance?

Collision insurance covers damage to your vehicle in the event of an accident, such as a fender bender or a collision with a fixed object. Unlike liability insurance, collision coverage is not required by law. It is usually mandated if you’re financing or leasing a vehicle. Collision insurance is subject to a deductible: the amount you're responsible for paying prior to your auto insurance coverage kicking in.

In this article, we’ll outline why collision coverage is useful, how much it costs, and review some frequently asked questions.

 

Collision insurance definition and details

Collision coverage protects your car if it collides with another vehicle or fixed object. This coverage applies regardless of fault. However, filing a collision claim involves paying a deductible and typically raises your future premiums.

What's covered by collision insurance:

  • Property damage to your vehicle sustained in a collision
  • Property damage sustained by hitting a fixed object, such as a tree or wall
  • Damage to your vehicle caused by an uninsured or hit-and-run driver
  • Damage sustained after losing control of your vehicle because of an icy road
  • Damage caused by hitting a pothole

State laws do not require collision coverage. If you’re leasing or financing your car, the dealer might require it. If you own a high-value vehicle, this coverage is highly recommended.


How much does collision coverage cost?

The true cost of collision coverage depends on the value of the insured vehicle and your deductible. Below is the average rate you can expect for a 2014 Honda EX with $500 and $1000 deductibles. Methodology here. 

Coverage Level
6-Month Premium
$500 Deductible
$267
$1000 Deductible
$213

 

To see a personalized estimate of your collision coverage rates, see quotes from popular insurance companies.

As you can see, the higher your deductible, the cheaper your premium will be. If you want to lower your overall cost for auto insurance, consider raising your deductible.


By how much does a collision claim raise insurance rates?

Filing a collision claim is similar to being involved in an at-fault accident: it can impact your premium in a big way. In 2018, the average collision claim increased rates by $303 over the course of a six-month period. Most insurance companies will charge this additional premium for a period of three to five years after an accident. One collision claim can increase your rates by between $1,818 and $3,030 over the course of the penalty period. Before filing a collision claim, get an estimate to see if the cost of repairs is less than the cost of the rate increase plus the deductible.

Learn more about how to decide whether to file an auto insurance claim


Frequently asked questions: collision coverage

Below are FAQs regarding collision insurance. If you have a more specific question, feel free ask our licensed insurance agents here.


Do I need collision insurance?

You need collision coverage if you’re leasing or financing a vehicle. Because another entity — a bank or car dealership — has a claim to the vehicle, they may mandate collision coverage. If your vehicle is worth more than $4,000, you should consider carrying collision and comprehensive insurance. 

Does collision insurance cover uninsured motorists?

Damage caused by drivers with no insurance — or not enough insurance — may be covered by collision insurance, depending on the specifics of the accident and the insurance company. Uninsured/underinsured motorist coverage is a great policy add-on if you're looking to avoid doubt about your coverage. Uninsured motorist coverage may help reduce your rate increase after a not-at-fault accident. While collision claims do raise insurance costs, uninsured motorist claims typically don't have as large an impact.

How are total loss collision claims compensated?

Unless specifically stated in the insurance policy, total loss collision claims are paid out to cover the cash value of the vehicle. If you total a 2012 Honda Accord, you will be paid the current value of that vehicle, not the amount you originally paid for it. Actual cash value includes depreciation and is the standard method of reimbursement for many insurance providers.

Does collision insurance cover hit-and-run collisions?

You can often claim the losses from hit-and-run accidents under collision coverage, although the claim may raise your rates in the future if you choose to switch to a new company. Your driving record will show a claim was paid out under collision coverage, which normally indicates you were deemed at-fault. Uninsured motorist coverage is a good way to avoid this.

Collision vs. comprehensive insurance

Comprehensive and collision coverage work together to protect your vehicle. However, they cover your car from different threats. Comprehensive covers things occurring outside of the driver's control, including theft, vandalism, natural disasters, and animal-related incidents. Both comprehensive and collision coverages are subject to deductibles and may be required when leasing or financing a vehicle.

Is collision coverage worth it for an old car?

If your car is worth less than $4,000, you may not need collision coverage. Many insurance companies will not write a collision insurance policy for an older vehicle. Refer to the Kelley Blue Book or NADA online listings to assess your car's value before purchasing collision coverage.

 

Additional resources

Ava Lynch LinkedIn

Based in Austin, TX, Ava has been in the insurance industry as a licensed agent for 4-plus years. Ava is currently one of The Zebra’s resident property insurance experts and has been featured in publications such as US News Report, GasBuddy, and Yahoo! Finance.

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Recent Questions:

Can a lender dictate what my deductible is?

Unfortunately, the terms of your loan can dictate what your coverage deductibles must be. Your lienholder may not necessarily notice right away if you change your deductible, but if they catch on they will add force-placed insurance, also known as collateral protection insurance, as a part of your monthly payments.

I was driving and the car in front of me hit a deer and I ran over it. Why won't my insurance cover it under comprehensive?

Hitting an animal is almost always covered under comprehensive coverage. Unless something else had happened, I would seek additional assistance with this claim because they should not be denying it.

My insurance company wants to deem my car totaled. Can this be disputed?

Typically, an insurance claims department will do whatever ends up the cheapest for them. Unfortunately, they will almost never negotiate the claim type or even how they pay out on it.

Am I liable if I hit a tire in the road that also damaged the car behind me?

Sorry to hear about the accident. I can not officially determine fault, but by the information provided, I would expect you to be responsible for the damages caused.

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