Collision Insurance Coverage

Collision insurance covers damages to your car in the event of an accident, no matter who is at fault, including accidents involving other cars and accidents with stationary objects, such as hitting a tree or fence post.

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Rachael Brennan

Rachael Brennan

Property and Casualty Insurance Expert

Rachael Brennan is a senior insurance editor at Policygenius, specializing in auto insurance. She worked for 21st Century Insurance, BlueCross BlueShield Massachusetts, and HealthPass New York. She also spent two years working as a content expert for dozens of auto insurance websites through 360Quote LLC.

Published August 6, 2021|6 min read

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Collision coverage may seem like a simple concept, but it doesn’t cover everything and is only one of the many types of coverage that make up full coverage insurance. Collision coverage is technically an optional coverage, but drivers who are leasing or financing their car may be required by their lender to add it to their policy.

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Collision insurance coverage is a necessity for many drivers, and not just for those financing their cars. Drivers who want to protect themselves financially need to purchase collision coverage, otherwise they may find themselves paying out-of-pocket for expensive damage to their cars.

Key Takeaways

  • Collision insurance covers damages to your car in the event of an accident, no matter who is at fault

  • If you are financing your vehicle, your lender will likely require you to carry collision coverage in the terms of your loan

  • Collision insurance comes with a deductible, which is the amount you agree to pay out-of-pocket in the event of a claim

  • If you don’t have collision coverage you will be responsible for paying to repair or replace your car on your own if it is damaged or totaled, which means people who can’t afford that out-of-pocket cost should make sure they have collision coverage

What is collision coverage?

Collision coverage pays for damage to your car in the event of an accident, no matter who was at fault. This includes coverage for accidents involving other cars as well as accidents with stationary objects, like if you hit a tree or fence post. It’s just one of several coverage that make up a full coverage policy.

Coverage TypeWhat It Does
Bodily injury liabilityThe part of your liability coverage that pays for medical bills if you've injured someone in an accident
Property damage liabilityThe other part of liability coverage, covers the cost of property damage you've caused in an accident
Personal injury protectionCovers medical expenses for you or your passengers after an accident
Uninsured/underinsured motoristCovers the costs if you're in an accident caused by a driver with little or no car insurance
ComprehensiveCovers damage to your car that happens when you're not driving
CollisionCovers damage to your car after a car accident, no matter who was at fault

If you are financing your vehicle, your lender will likely require you to carry collision coverage in the terms of your loan. If you own your vehicle outright you can choose whether or not to carry collision insurance, though drivers who can’t afford to replace their car out-of-pocket should carry collision coverage to protect themselves financially in the event of an accident. 

What does collision coverage pay for?

Collision coverage pays to repair or replace your vehicle if it is damaged in an accident, whether or not you were at fault. Collision insurance covers damage your car when:

  • You are in a collision with a stationary object, like a tree or a telephone pole

  • You are in a single-car accident where your car rolled or tipped over

  • You are in a collision with another vehicle and it was your fault

  • You are in a collision with another vehicle and they were at fault, but they are uninsured or underinsured

Typically, when you are in an accident and the other driver is at fault, their property damage liability coverage is responsible for repairing or replacing your vehicle. Most states require drivers to carry a minimum amount of liability coverage, but some places only require a scant $5,000 to $10,000 in property damage liability. 

If you are hit by someone who only has $5,000 in property damage liability coverage, or worse, hit by someone who doesn’t have any insurance at all, your collision coverage would step in to pay for repairs or replacing your car. 

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What is a collision insurance deductible and how does it work?

Collision insurance comes with a deductible, which is the amount you agree to pay out-of-pocket in the event of a claim before your insurance company covers the rest. For example, if you choose a $500 deductible and your $22,000 car is stolen, your insurance company would write you a check for $21,500 to replace your car.

Most insurance companies give you several options to choose from when deciding on a deductible. People who don’t want to be responsible for any of the cost during a claim can choose a deductible of $0, but this will increase your rates. Choosing a deductible of $500 to $1,000 can lower your insurance rates and make your monthly payments more affordable, but you will then be responsible for that amount if you have to file a claim.

Choosing a higher deductible can also mean you may have some damage you’d be better off paying for out-of-pocket without reporting the claim to your insurance company. For example, if you choose a $1,000 deductible and later back into a pole with your car, if the cost to repair your bumper is only $750 it isn’t worth filing a claim. You will have to pay for the repair either way, but reporting it means you could see an increase in your insurance rates, so it might make more sense for you to just pay for the repairs yourself.

What is the difference between collision and comprehensive coverage?

As mentioned above, collision coverage pays for damages in an accident with another car or a stationary object. Both coverages pay to repair or replace your and and they are typically sold together, which makes it hard to differentiate between the two. How is collision different from comprehensive coverage?

Unlike collision insurance, comprehensive coverage pays for damages to your car that are not covered by a collision, including:

  • Theft

  • Vandalism, fire, and riots

  • Falling objects

  • Storm damage

  • Animal-related damage

  • Windshield and glass damage

Collision coverage and comprehensive coverage are both part of what is known as full coverage insurance, but they cover two very different types of damage to your vehicle. Neither collision or comprehensive coverage pay for any damage you cause to someone else’s property—that is paid for by your liability coverage. However, both collision and comprehensive insurance are recommended types of insurance for many drivers to protect themselves financially.

How much does collision insurance cost?

While liability insurance typically makes up the bulk of your insurance premium, collision coverage isn’t exactly cheap. According to a 2021 report from the NAIC, in 2018 the average insurance policy in the United States was $1,189.64, with $377.62 of that total going toward collision coverage.

StateAverage Total PremiumCollision
Alabama$1,066.92$380.51
Alaska$1,111.07$387.12
Arizona$1,181.29$326.28
Arkansas$1,097.33$375.25
California$1,194.83$483.60
Colorado$1,290.34$330.50
Connecticut$1,326.09$407.54
Delaware$1,393.70$352.86
District of Columbia$1,574.09$535.96
Florida$1,520.99$361.79
Georgia$1,382.52$408.41
Hawaii$944.70$357.78
Idaho$828.32$262.67
Illinois$995.55$339.04
Indiana$864.82$286.49
Iowa$816.18$252.65
Kansas$985.34$287.24
Kentucky$1,088.73$312.51
Louisiana$1,751.37$487.44
Maine$782.72$294.80
Maryland$1,327.40$422.06
Massachusetts$1,246.08$440.55
Michigan$1,590.35$479.11
Minnesota$971.66$265.74
Mississippi$1,149.85$372.17
Missouri$1,052.86$315.49
Montana$1,025.46$283.65
Nebraska$962.79$272.48
Nevada$1,386.22$366.54
New Hampshire$882.65$327.30
New Jersey$1,500.58$414.39
New Mexico$1,102.15$311.24
New York$1,558.66$457.77
North Carolina$870.87$342.13
North Dakota$844.18$279.45
Ohio$881.91$302.57
Oklahoma$1,123.61$346.73
Oregon$1,077.22$280.61
Pennsylvania$1,100.84$376.21
Rhode Island$1,500.31$474.58
South Carolina$1,227.54$318.08
South Dakota$905.02$244.47
Tennessee$995.91$355.01
Texas$1,372.25$442.88
Utah$1,038.50$309.20
Vermont$854.27$329.47
Virginia$956.98$316.05
Washington$1,120.02$312.65
West Virginia$1,096.80$350.20
Wisconsin$830.06$247.95
Wyoming$971.07$297.61
U.S. Average$1,189.64$377.62

Remember that the numbers above are averages, so your individual rates could be higher or lower based on personal factors such as your driving history, your age, and your ZIP code.

When should I drop collision coverage?

For many people, dropping collision coverage isn’t a good idea. If you can’t afford to replace your car if it gets totaled in an accident, keep your collision coverage in place. 

On the other hand, those people who have older vehicles that they can afford to replace can consider dropping collision coverage. For example, if you drive a 12-year-old sedan worth less than $1,000, it may not make sense for you to pay for collision coverage. 

Should I add collision insurance to my policy?

There’s a lot to consider when deciding whether or not to add collision coverage to your policy.

Are you financing your vehicle?

If you have a loan or you are leasing your vehicle, your lender or lessor is likely to require you to carry collision coverage as part of the terms of your loan. This is to protect their investment and prevent you from ending up in a situation where you have a loan for a car that no longer exists because it was totaled in an accident.

Can you afford to pay for repairs out-of-pocket?

If you choose not to add collision coverage to your insurance policy, you might save a few dollars on your annual insurance rates. However, you will be responsible for paying to repair or replace your car on your own if it is damaged or totaled, which means people who can’t afford that out-of-pocket cost should make sure they have collision coverage as part of their insurance.

How likely are you to have to file a claim?

Do you live in a rural area? Do you work from home? Are you careful about keeping a distance from other drivers on the road? These are all questions to consider carefully before choosing to add or drop collision coverage from your policy. Remember, no matter what precautions you take, you can never be completely sure you won’t be in a car accident. Other drivers may not be as careful as you are and taking your eyes off the road for even a moment is all it takes to put you in a dangerous position, which means there is always some level of risk while driving.

Frequently Asked Questions

What is full coverage insurance?

The term “full coverage” car insurance isn’t exactly correct, because there is no such thing as an insurance policy that covers you in every situation. What most people refer to as full coverage insurance is actually a collection of three types of coverage: liability insurance, comprehensive insurance, and collision insurance. Full coverage could also include PIP, MedPay, uninsured or underinsured motorist coverage, and other types of insurance if they are required by law in your state.

Does a collision claim affect my car insurance?

Yes, a collision claim is likely to affect your insurance rates. Your rate increase will depend on a number of factors, including who was at fault in the accident and the amount of money the insurance company paid toward your claim. Each insurance company has their own rules and standards about what impacts your rates, so check with your insurance representative if you have questions about the specifics of your policy.

What isn’t covered by collision insurance?

Collision insurance doesn’t cover any damage you cause to other people or their property. It doesn’t cover medical expenses for you or your passengers. It also doesn’t cover theft or incidents that happen in a non-collision accident, like falling tree branches or flood damage.

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