Most states only require liability insurance to protect other people against any damages you might cause behind the wheel. But that doesn’t mean liability coverage is the only protection you need. Collision car insurance is additional coverage offered by most providers to provide additional protection. in many states, but. While it does increase the price of your auto insurance, it offers you protection that is a priority to most drivers: coverage if your own car is damaged in a crash. What is comprehensive and collision coverage, and is the extra insurance cost worth it for you? Let’s take a look.
What is collision car insurance?
What does collision insurance cover? Collision car insurance pays for the repair or replacement of your vehicle (up to your policy limits) if it’s damaged in a car crash, whether it’s your fault or not.
Technically, the at-fault driver’s liability coverage should pay for repairs to the other party’s vehicle. But collision coverage can still lend a hand when you weren’t the one to cause the crash.
When the damages to your car are the other driver’s fault, your collision auto insurance would pay to fix your car, protecting you from out-of-pocket costs as you seek reimbursement from the other driver’s insurance company. This works well in situations where the driver’s insurance company is slow to respond, or in the event the at-fault driver is underinsured or uninsured. The claim won’t affect your insurance premium if the other driver is at fault.
Sometimes, there isn’t another driver or insurance company to go after for reimbursement. In this case, your collision auto insurance will pay for your repairs. Some examples where there’s no insurance company to go after include:
- The other driver was uninsured or underinsured
- You were in a hit-and-run accident
- Your car hits an object like a wall, tree or curb while you were driving
- Your car is damaged by road debris or potholes
In short, collision coverage is designed to protect your car, helping you pay to repair or replace it in the event it collides with another vehicle or object. That said, collision insurance doesn’t cover everything. Here are a few things that are specifically excluded:
- Damage to another person’s vehicle
- Damage to your car from theft or vandalism
- Damage from an animal running into your car
- Damage to your car from a fire
- Damage from a natural disaster or bad weather like hail
- Medical bills
Do I need collision car coverage?
If your car is financed or you’re leasing it, your lender will typically require you to have collision insurance until it’s paid off.
If you don’t owe money on your car, ask yourself how much it would cost to replace or repair your vehicle if it’s damaged or totaled in an accident. If you don’t think you can afford to fix or buy a new car after a crash, having collision coverage could give you peace of mind after an emergency. But if your car is an older model or significantly deteriorated, you might be better off skipping the coverage and pocketing the money you save to put toward your next ride.
What if the damage to my car is severe?
Collision insurance will pay for repairs to your car unless the cost of fixing the damages is higher than your car’s value. In that case, your car will be “totaled” by your insurance company and they will pay you the full book value of the car. You can get the book value of your car online at Kelly Blue Book.
How do I pick the right collision coverage?
To start, you should opt for enough collision coverage to cover the value of your car. That way if the vehicle is totaled, you can easily replace it. You’ll see the amount of collision insurance indicated in your policy as a limit, which is the maximum amount your policy will pay toward a covered claim.
Collision coverage comes with a deductible, which is an amount you pay before your insurer pays for your claim. For example, if you have a $1,000 collision deductible and your car is damaged, you have to pay $1,000 towards the repair and the insurance company pays the rest.
This doesn’t mean you’ll need to write your insurer a check for $1,000. For example, if the damage to your car costs $3,000, your insurer will subtract your deductible amount from the check they write you. In this example, they would just send you the remaining balance of $2,000 to put toward your repair costs.
You can usually pick the amount of your collision deductible when you’re signing up. The lower the deductible, the higher your annual premium (the amount you’ll pay for your policy), so choose the maximum amount you’re comfortable paying out-of-pocket after an accident to save on your auto insurance.
Frequently Asked Questions
What is no-fault insurance?
No-fault insurance covers the medical expenses of your passengers and you in the event of a crash, regardless of whose fault the accident is. No-fault insurance may also be referred to as personal injury protection (PIP) insurance.
What is the difference between collision and comprehensive coverage?
While collision coverage protects your car when you get into an accident, comprehensive coverage helps you repair or replace your vehicle if it’s damaged in an event not caused by a collision like hail, flooding or a falling object. It also applies if your car gets stolen or vandalized.
Should I buy both comprehensive coverage and collision insurance?
It’s recommended to have both comprehensive and collision coverage if you can afford it because they cover different situations. Collision auto insurance covers damages due to crashes or collisions. Comprehensive takes care of damages that are out of your control like falling objects or natural disasters.
Do I need collision and comprehensive coverage if I’ve paid my car off?
No. Once your car is no longer financed, you’re not required to keep these coverages. But it may be worthwhile to keep them if your car value is high. A good rule is the 10% rule. If the annual premium is higher than 10% of your car’s book value, you can consider dropping these coverages.
That said, some people think it’s worth it to ignore the 10% rule and keep collision coverage in place. That way, if you get into an accident, you’re only on the hook for your deductible, not the full amount of repairing or replacing your car.