Car insurance policies are made up of numerous coverage types. One of those coverage selections is collision insurance. True to its name, collision insurance is designed to pay for damages to your vehicle caused by colliding with something, but it’s not always quite so simple. So what does collision insurance cover? Below, Bankrate’s insurance experts explain collision coverage to help you better understand what it does and doesn’t cover.

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What is collision insurance?

Collision insurance is part of a full coverage car insurance policy, along with comprehensive coverage. Together, these two coverage types pay for damage to your vehicle, regardless of fault in an accident.

What does collision insurance cover?

Collision covers damage to your vehicle caused by colliding with something. This includes damage caused by:

  • Hitting another vehicle
  • Striking a stationary object like a tree, pole or mailbox
  • Colliding with a building

One caveat is colliding with an animal, such as a deer. That type of damage is covered by comprehensive coverage.

If you are not at fault for an accident, the other driver’s property damage liability should take care of the damages to your car. Sometimes car insurance claims are lengthy, though, and you might want your car fixed more quickly. You could choose to pay your collision deductible and use your coverage to fix your vehicle. Your company will then pursue the other party’s insurance company to receive a payout from their property damage liability. This is a process called subrogation.

What doesn’t collision insurance cover?

Collision insurance does not cover everything. Here are a few things that are excluded:

  • Damage caused by theft or vandalism
  • Animal damage
  • Fire or water damage
  • Damage from a natural disaster or bad weather like hail
  • Intentional damage

With the exception of intentional damage, which is never covered by insurance, these perils are covered by comprehensive coverage.

Do I need collision car coverage?

You might. If you have a loan or lease on your car, collision insurance is likely required as part of your financing terms. In this case, you’ll likely have to buy a policy that includes both comprehensive and collision coverage.

If you own your vehicle outright, the choice to buy collision insurance is up to you. Typically, you must also buy comprehensive to have access to collision (although you can usually buy comprehensive without collision), so keep that in mind as you get auto quotes for different car insurance coverage types.

What should I consider when purchasing collision coverage?

If you’re adding collision insurance to your car insurance policy, you should consider a few things to ensure that the coverage fits your needs:

  • Your premium: Having collision on your policy is likely to increase your overall cost for car insurance, because the more coverage you buy, the more you’re likely to pay. If your budget is especially tight but you need or want collision, you might want to compare car insurance rates from several companies to find the most competitive price.
  • Your deductible: Both collision and comprehensive coverage have a deductible, which is the amount you’ll pay out of pocket if you file a claim for those coverage types. A higher deductible will generally lower your rate, since you are willing to pay more in the event of a claim. Be sure to choose a deductible level that you can afford to pay.
  • Your overall financial health: If your vehicle is paid off and you aren’t required by a financial institution to buy collision insurance, think about your overall financial situation. If you can handle the financial burden of repairing or replacing your vehicle out of pocket, you might opt to go without collision. But if you would need the insurance coverage to fix or replace your vehicle after a claim, it’s probably a good idea to buy collision insurance.

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