What is Collision Insurance?

Learn more about what collision insurance covers, how much it costs, and whether you need to have it.
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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 car insurance coverage kicking in. Collision insurance is often associated with comprehensive insurance. The pair of coverages is commonly referred to as “full coverage insurance."

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

Key takeaways
Key takeaways
  • Collision insurance protects you if you collide with another vehicle or object.
  • Collision insurance is not required by law, but lenders and dealers will require that leased and financed vehicles hold full coverage insurance.
  • Collision insurance is subject to a deductible.
  • Your insurance rates will increase if you have to file a collision claim. 

What does collision insurance cover?

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

It does not cover damage to other vehicles, medical bills for other driver's injuries, theft, vandalism, or damage from fire, hail or fallen objects. These would be covered by other sections of your auto insurance policy: liability and comprehensive coverage, if you carry it.

 

Is collision insurance required?icon-question

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.

Vehicles purchased through financing and leased vehicles require full coverage insurance. This is because by signing a lease or loan application, it means you owe but have not yet paid the full amount of the vehicle— you are responsible for paying the auto loan, and on the hook for loaned dollars if the car is totaled right after buying it. Lenders require collision and comprehensive insurance because state-required property damage limits would not be enough to cover a new vehicle if totaled.

 Learn more about the key differences between collision and comprehensive insurance.


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. View our methodology below. 

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

Auto insurance premiums by deductible amount

Updating data...

Coverage Level Avg. Annual Premium
$500 deductible $1,699
$1,000 deductible $1,493

Source: The Zebra

The Zebra’s Dynamic Insurance Rating Tool data methodology

The Zebra’s Dynamic Insurance Rating Tool for home and auto insurance rates utilizes the latest ZIP code-level rate filings from across the U.S., sourced from Quadrant Information Services and S&P Global. These filings, typically updated annually or biennially by insurers, are verified through Quadrant’s QA process and then integrated into The Zebra’s estimator.

The displayed rates are based on a dynamic home and auto profile designed to reflect the content of the page. This profile is tailored to match specific factors such as age, location, and coverage level, which are adjusted based on the page content to show how these variables can impact premiums.

For a comprehensive understanding, see our detailed methodology.


Use our handy claims calculator to find out whether you should file a claim.


Collision deductibles

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As you can see, a higher deductible usually results in cheaper insurance premiums. If you want to lower your overall insurance costs, consider raising your deductible.

It’s important to keep your collision deductibles in mind if you find yourself in an accident. If you collide with an object and the damage costs less than your deductible amount to repair, it is best to pay for the damages out of pocket to avoid your insurance premiums increasing. If your vehicle was totaled by the impact, your insurer would take the value of your car before the accident and subtract your deductible amount before sending you a check.

 

By how much does a collision claim raise insurance rates?

key finding 2 rate increase
 

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 to ask our licensed insurance agents.

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.

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.

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.

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.

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.

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.

Protect your car with the right coverage at the best value.

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