Everything You Need to Know about Collision Insurance

When you insure your vehicle, there are many types of coverage to consider. While states can vary in their minimum coverage requirements, most require some form of liability insurance that includes bodily injury and property damage coverage. Beyond liability insurance, drivers may also choose to purchase collision insurance for additional coverage.

In fact, if your car is leased or if you're still making payments on your vehicle, you may even be required by your lender to carry collision and comprehensive insurance (sometimes referred to as full coverage).

Getting a better understanding of what collision insurance is and what it entails will help you make better-informed decisions about your own car insurance policy!

What Is Collision Insurance or Collision Coverage?

In the simplest terms, collision insurance is designed to protect you if you're ever in an accident. Whether you get into a crash with another vehicle or a stationary object (such as a guardrail), the damages to your own vehicle are typically covered by a collision insurance policy. This can include costs related to repairing damage to your vehicle, or even replacing it entirely if your car is determined to be a total loss.

One of the most common misconceptions people have about auto insurance is that general liability coverage (such as state-minimum bodily injury and property damage coverage) will pay for damages to the policyholder's vehicle in the event of an accident. In reality, general liability coverage pays for damage done to other persons or property.

This means that without collision coverage, you're responsible for paying for damages to your own vehicle. And, as you can imagine, these costs can add up quickly.

What Does Collision Insurance Cover?

While each policy can vary in its specific coverage, collision insurance typically covers repair or replacement costs for your vehicle related to a:

Collision with another vehicle or vehicles
Collision with a stationary object, such as a guardrail, tree, or pothole
Single-car accident, such as a rollover crash
A collision that occurs while your car is parked, such as a hit-and-run

Specifically, collision car insurance can help pay for the cost of repairs to your vehicle after one of these incidents. If the cost of repairs is determined to be greater than your car's value, your vehicle may be rendered a total loss, or “totaled.” When a vehicle is totaled, your collision insurance policy will help pay to replace it — typically based on the actual cash value of your vehicle (minus any collision deductible you may have in place).

What Does Collision Insurance Not Cover?

There are some coverage exclusions under a standard collision insurance policy. For example, collision insurance does not cover:

Damage to your vehicle that is unrelated to driving, such as vandalism or natural disasters (these types of damages are typically protected by comprehensive coverage)

Damage caused to another person's vehicle or property
Mechanical breakdowns and failures caused by normal wear and tear
Collisions with animals (such as deer)
Medical bills for you or another person

Benefits of Collision Insurance

No one wants to spend more than they have to on car insurance. However, it's important to make sure you have the coverage you need. Even if you aren't legally required to carry collision insurance in your state, there are many benefits to adding collision to your car insurance coverage:

Protection in the event of an accident: Paying out-of-pocket for your own car repairs (or an unexpected car replacement) can cause a lot of financial stress following an accident. Having collision insurance means that these costs will be covered and you'll only need to pay your deductible.
Added peace of mind: An accident can happen at any time. Having collision coverage can give you some added peace of mind when you're behind the wheel because you know you have that additional coverage.
Retained car value: If you are in an accident, collision insurance can help pay for the repairs your car needs to retain its resale value. This helps keep your vehicle in the best possible condition.

When deciding whether or not collision coverage is right for you, you may also want to consider the current age and value of your car. The right amount of coverage for an older car may differ from a newer car, and will depend on each driver's unique situation and lender requirements.

How To Choose a Collision Insurance Deductible

Aside from choosing the right collision coverage amount for your vehicle, you'll also need to select a deductible for your collision insurance policy. It's important to understand that your collision deductible is separate from any other deductibles on your policy. This means that if you're in an accident where multiple coverages come into play, you may need to pay two deductibles.

Specifically, your collision deductible refers to the amount you will need to pay to your insurance company when you make a collision claim. For example, if the total cost of your car repairs is $2,000 and you have a $500 deductible, you'll need to pay that $500 out of your own pocket before your insurance company will kick in the remaining $1,500 to fix your car.

The deductible amount that you select for your policy will impact the total cost of your premium. For example, a higher deductible means you'll enjoy lower monthly payments. In the event of an accident, however, you'll be on the hook for a higher out-of-pocket amount.

On the other hand, choosing a lower deductible means your monthly insurance payments may be higher — but you won't have to pay as much out of your pocket if you need to file a claim.

When choosing a collision deductible, make sure you select an amount that is appropriate for your financial situation in the event of an accident. Also keep in mind that deductible amounts can vary not only by insurance carrier, but by state as well. Some common collision deductible amounts include:

$250
$500
$1,000
$1,500

The Cost of Collision Coverage

Wondering how much it would cost to add collision auto coverage to your car insurance policy? There are many factors that come into play when an insurance company determines the cost of coverage for a policyholder. Some of the most common influencing factors include:

Driving history
Vehicle insured
Chosen deductible

Choose Clearcover for Collision Coverage

There's a lot to think about when you're shopping for car insurance. One of the most important decisions you'll make is whether to purchase comprehensive and collision coverage with your policy. Clearcover makes it easy to find the coverage you need to feel confident behind the wheel. Get a perfect-fit policy you'll never second-guess. Get a free quote to take control of your coverage and see what you can save.