What is Collision Insurance and What Does it Cover?
Enter your zip code below to view companies that have cheap auto insurance rates.
UPDATED: Nov 9, 2019
It’s all about you. We want to help you make the right coverage choices.
We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.
Collision insurance pays to repair or replace your vehicle if it rolls over or impacts another vehicle or object. When combined with liability insurance and comprehensive insurance, you have what is known as “full coverage”.
What Does Collision Insurance Cover?
The loss scenarios below give some examples of what collision covers:
- Running into a highway guardrail
- Hitting a mailbox
- Colliding with a building
- Collision with another vehicle
- Hitting a fence or tree
What is Not Covered by Collision Insurance?
Collision insurance does not cover:
- Damage to your vehicle from hail or weather
- Damage caused by fire, flood, or vandalism
- Damage caused by falling objects, birds, or animals
- Breakage of glass if not part of a collision
- Theft of your vehicle
All the examples above that are not covered by collision insurance would be covered by comprehensive insurance if you have it on your policy.
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Collision Deductibles and Limits
When buying collision insurance, you need to specify a deductible amount that will be deducted from any settlement received from your insurance company. Common collision deductibles are $250, $500, or even $1,000.
The limit that collision will pay is the lesser amount of the actual cash value of your vehicle or the cost to repair. Actual cash value, or ACV, is the purchase price of the vehicle minus depreciation.
For example, let’s say you drive a 2010 Chevy Silverado and you back into a concrete pillar in a parking lot. The damage to your bumper and tailgate is $1,800, and you have a $500 collision deductible.
You will receive a check from your insurance compay for $1,300. If you elect to have the truck repaired, you will have to pay the extra $500 out of your own pocket.
Now let’s say you roll your Chevy and the costs to repair the damages exceed the actual cash value of the truck. This is known as a “total loss”.
The ACV of your truck is $12,500, so your insurance company will settle the claim for $12,000 ($12,500 minus your $500 deductible).
Why do I Need Collision Coverage?
If you have a loan on your vehicle, or your vehicle is leased, you will be required to carry collision insurance. This protects the lender’s or lessor’s interest in the vehicle in case it is damaged or destroyed.
If you do not have a loan on your vehicle, or it is not leased, collision is an optional coverage. But if you cannot afford to fix or replace your vehicle if it is damaged or totaled in an accident, then you will want to consider having it on your policy for peace of mind.
Frequently Asked Questions
- How Much Does Car Insurance Cost?
- Cheap Car Insurance: Myth or Reality?
- Will a Speeding Ticket Raise My Car Insurance Rates?
- Car Insurance Rates 2018: Why are Prices Increasing?
- How Much Does Car Insurance Cost for a 16 Year Old?
- Which Cars are Cheapest to Insure?
- Does a Teenager with a Learner’s Permit Need to be Listed on my Policy?
- View All Coverage Questions
Popular Rate Quotes
- Chevrolet Cruze Insurance
- Honda Civic Insurance
- Honda CR-V Insurance
- Toyota Rav4 Insurance
- Toyota Corolla Insurance
- Chevrolet Impala Insurance
- Honda Accord Insurance
- Ford F-150 Insurance
- Toyota Camry Insurance
Compare Rates and Save
Find companies with the cheapest rates in your area