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Collision insurance

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Most states only require liability insurance to protect other people against any damages you might cause behind the wheel. But that does not mean liability minimums are the only useful coverages. If you finance or lease a vehicle, the lender or dealer will likely require you to have full coverage car insurance, which includes comprehensive and collision coverage. Collision is additional coverage offered by most insurance companies.

While collision insurance does increase the price of your auto insurance, it offers the financial protection that most drivers find to be a priority: coverage for if your car is damaged in an accident. This way, you are paying a deductible instead of covering all expenses out-of-pocket if your car is damaged from a covered claim. What is collision coverage and is the extra insurance cost worth it for you? Bankrate can help you gain a better understanding to help form your decision.

What is collision car insurance?

What does collision cover? Having collision coverage means your car insurance helps pay for the repair or replacement of your vehicle if it is damaged in a car accident. It is especially beneficial in at-fault accidents where your liability coverage would only go toward the other driver’s expenses and their passengers’.

Generally, the at-fault driver’s property damage liability coverage helps pay for repairs to the other party’s vehicle. However, collision coverage can still offer assistance when you were not at fault for the accident.

When the damages to your vehicle are due to another driver’s fault, your auto insurance could help repair your car under collision coverage, protecting you from some out-of-pocket costs as your insurance company seeks reimbursement from the at-fault 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 does not have enough or any coverage. In some cases, uninsured and underinsured motorist coverage might apply, but not always.

What collision insurance covers

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. Imagine you strike a curb and damage your tires and bumper. In this case the damage is caused by you and collision insurance applies. Collision insurance also pays for your car’s repairs, even if you were at-fault in an accident.

Besides the two scenarios above, collision insurance covers damages from:

  • An accident with another car
  • Hitting a tree, fence or mailbox
  • Damage to your car from crashing into road hazards, such as a sign post or guardrail

What collision insurance does not cover

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

  • 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

The non-covered perils mentioned are covered by comprehensive insurance.

Do I need collision car coverage?

If your car is financed or you are leasing it, your lender will typically require you to have collision insurance until it is paid off or your leased vehicle is returned.

If you do not owe money on your car, ask yourself how much it would cost to replace or repair your vehicle if it is damaged or totaled in an accident. If you do not 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 unexpected situation. But if your car is an older model or significantly deteriorated, you might be more comfortable skipping the coverage.

How do I purchase collision coverage?

You can purchase collision coverage through most auto insurers when getting a policy. Compared to liability-only insurance, collision coverage is useful because it offers financial protection against damage to your vehicle. Your collision coverage helps pay for repairs or replacement costs up to your car’s actual cash value, which is the maximum amount your policy will pay toward a covered claim. Collision coverage also has a deductible, which you would be financially responsible for in a claim.

For example, if your car has $5,000 in damages covered under collision coverage and you have a $1,000 deductible, you would likely receive payment from your insurance company for $4,000 to cover the repair expenses. This does not mean you will need to write your insurer a check for $1,000. Instead, your insurer will typically subtract your deductible amount from the check it writes you.

As a policyholder, you can pick your collision deductible amount when you purchase the coverage. The lower the deductible, the higher your annual premium. Insurance experts generally recommend choosing an amount you are comfortable paying out-of-pocket after an accident.

Frequently asked questions

What is the difference between collision and comprehensive coverage?

While collision coverage helps cover expenses to repair your car when you get into an accident, comprehensive coverage helps you repair or replace your vehicle if it is 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.

Do older cars need collision coverage?

Outside of your state’s required minimums, additional car insurance coverages are a personal decision as long as the car does not have an active loan or lease. Some people opt for full coverage, which includes collision and comprehensive coverages, to provide financial protection for their vehicles. Because older vehicles tend to have depreciated values, some drivers may find that collision coverage is not as beneficial due to their car’s value and the potential cost of repair.

What if the damage to my car is severe?

Collision insurance will pay for repairs to your car from a covered claim, unless the cost of fixing the damages is higher than your car’s value. In that case, your car will generally be “totaled” by your insurance company and you will be paid the actual cash value of your vehicle determined by your insurance company at the time of the claim, minus your deductible. You may get an idea of the estimated value of your car online at sites such as Kelly Blue Book.

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Written by
Cynthia Paez Bowman
Personal Finance Contributor
Cynthia Paez Bowman is a former personal finance contributor at Bankrate. She is a finance and business journalist who has been featured in Business Jet Traveler, MSN,, and
Edited by
Insurance Editor