What is Collision Insurance?
Collision insurance is an optional coverage for your vehicle that you may purchase in addition to your liability insurance from your insurance company. If you lease or rent your car, you may need this type of insurance, as vehicle lessors often require it.
Suppose you’re involved in an auto accident or collision with a roadside object. In that case, collision insurance can be applied to many car accidents and covers the cost of repairs and replacement -even if the accident or collision was your fault.
Collision insurance policies focus on the car’s actual cash value with a customizable collision deductible. The collision policy must be added to their car insurance coverage for many vehicle owners. However, for others, it may seem an unnecessary add-on to their car insurance.
Not only will we discuss what collision insurance covers and how much collision coverage premiums cost, but whether or not collision coverage would be worth the money.
What Does Collision Insurance Cover?
Collision insurance lives up to its name by providing coverage for any repair costs to your car in the event of an at-fault accident. While your personal liability car insurance covers the price of the other driver’s car, with collision insurance, you won’t have to pay any out-of-pocket cost to repair your damaged car.
Car accidents where your collision insurance would cover you would be:
- Car accident - If you were to cause an accident with another driver’s vehicle, damages to your car would be covered.
- Hitting a stationary object - If you crash into a parked car, telephone pole, tree, or other roadside object, you could file an insurance claim. The accident was still your fault, so it’s all the same for your insurance provider.
- The car becomes stuck - You can get it stuck by steering it into a ditch, pothole, or perhaps a flooded road from a storm or a natural disaster. Even if your car flips over, you would still be covered. These accidents are tricky because things like potholes are visible at the last second.
- Rollover Accident - If the vehicle overturns in a rollover accident, collision coverage will cover the physical damage to the vehicle.
- Hit-and-run - When a driver damages your car, their liability insurance should cover those damages. But, say that the driver speeds away. Now, you wouldn’t be able to file a liability claim. Instead, you can file an insurance claim if you cannot find the at-fault driver.
What Damage is Not Covered by Collision Insurance Coverage?
As great as it is, collision insurance has its own coverage limits. The typical situation would be a car accident between another driver’s vehicle and yours. Even in cases where your car is damaged, you may not be covered for the repairs of your vehicle.
Here are instances where collision insurance wouldn’t cover the policyholder’s vehicle damage:
- Weather damage - Auto damages sustained in a thunderstorm, blizzard, or falling debris from a hurricane or wind storm aren’t covered. The best way to think about it is that “acts of nature” aren’t covered; you’d need comprehensive coverage.
- Hitting an animal on the road - You can think of animals as part of nature rather than other drivers. You wouldn’t be covered in the event of hitting a deer or coyote.
- Medical costs - Collision insurance never covers medical costs or bills after an auto accident or vehicle collision. Medical expenses are covered under a personal injury protection policy or Medpay insurance policy.
- Theft or vandalism - If your car gets vandalized, stolen, or anything else that may happen when you’re away from it, it will not be covered. You would not be reimbursed for a replacement either. Think of it this way: If your car gets damaged by anything other than a car-on-car accident, then comprehensive coverage will pay for it. Personal property in the vehicle are not covered.
What are the deductibles for Collision Insurance Coverage?
Deductibles are a regular part of collision insurance. Suppose you were to get into an accident and file an insurance claim. In that case, the collision deductible is all you pay for your vehicle’s repair costs.
A collision deductible can range between $250 to $1000, but there are instances where deductibles are higher on a policy.
You should file insurance claims sparingly since claims could negatively affect your car insurance rates.
Your insurance payout will equal your car’s actual cash value minus the deductible. You can choose your collision deductible amount –anywhere between $500 to $1,500. A smaller deductible means you’ll personally pay less out of pocket for your vehicle repairs.
Does Collision Coverage Include a Vanishing Deductible?
Collision insurance may also include what is called a vanishing deductible. A vanishing deductible is a way to save on your insurance policy.
For every year of safe driving, the policyholder saves $100 on their collision deductible. With enough safe driving, you could effectively “vanish” your collision deductible for the year.
If you set your deductible to $500, it would take five years to cover your deductible effectively. If you were to get into an accident and need to file an insurance claim, then the vanishing deductible reward would be reduced to $100.
How Much Does Collision Insurance Cost?
We’ll think about the total cost to keep your leased car insured as opposed to what the price sticker for collision insurance says.
The average annual cost of collision coverage is about $382. Some customers can pay as low as $250 or as high as $500. The price of your collision coverage would be added to your legally required liability auto insurance policy.
Liability insurance is where the bulk of the car insurance cost comes from, as liability coverage can cost anywhere between $1,500 to $2,000 based on the state’s minimum liability coverage limits. Your vehicle insurance premium rates depend on the car’s make and model. The most significant deciding factor in collision insurance is the value of your vehicle.
The cost of auto insurance depends on your car and driver’s history and habits. Factors like your age, sex, and even marital status can determine how much your car insurance rates will be.
Your state is also significant since they have different vehicle insurance requirements. You can control how much you pay with your fully adjustable car insurance deductibles and customizable auto insurance policy limits.
Who needs Collision Insurance Coverage?
73% of vehicle drivers purchase collision coverage because they want their car covered for repairs in the event of an at-fault accident. Auto repair costs can often be high; no one wants to be stuck with those vehicle repair fees.
These are all circumstances where you would purchase or decline collision coverage:
- Local drivers lack liability coverage - If you live where most drivers are driving uninsured, collision coverage is a must-have. They have no liability insurance to pay for their auto damages if they’re at fault in the case of an auto accident. Or you may be a resident of New Hampshire, where liability insurance isn’t required.
- Drive a high-value car - The car insurance payout of collision coverage is equal to the current value of your vehicle. If you drive a high-value car, the insurance payout will usually be high. As your car ages and decreases in value, the insurance payout may not be worth the investment. A good rule of thumb is that you won’t need collision insurance if your car is less than $3,000.
- Car is a lease - If your car is a lease, you must carry collision insurance to protect the leasing company’s car. There may be other coverages you may be required to take on.
- You can’t pay for expensive repairs out of pocket. You’ve done the car insurance cost calculation and found that you need help to afford the cost insurance claim.
When shopping for collision insurance, comparing and contrasting different car insurance quotes from regional and national insurance companies is best.
Remember to lead with your car value and driving record when asking an insurance agent about the benefits of different insurance coverages. You’ll want the insurance payout to be proportionate with the car value and to begin with a low collision deductible.
If you need to familiarize yourself with the value of your car, try consulting Kelly’s Blue Book.
Get an Affordable Car Insurance Quote with Great Coverage from Insurance Navy
Here at Insurance Navy, we offer low-cost car insurance policies. Like other insurance companies, we offer collision insurance bundled as comprehensive insurance coverage. Contact one of our insurance agents and receive a cheap car insurance quote today.
FAQs
Is collision insurance required by state law?
Collision insurance is not required by law. However if you finance or lease your car your lender or leasing company may require it. Regardless of the requirement, it’s a smart idea to have collision coverage especially if your driving in high traffic areas.
Does collision insurance cover me if I damage someone else’s property?
Collision covers your vehicle. But if you damage someone else’s property (like a fence or another car) the cost is typically covered under your property damage liability insurance.
Does collision insurance cover rental car accidents?
Collision insurance may cover damage to a rental car if you have this coverage but the specifics vary by state. Check with the rental car provider for their insurance policies.
Does collision insurance cover animal accidents?
If your vehicle hits an animal (like a deer) the damage is usually covered under comprehensive not collision. Check your policy to confirm which one applies.
Does collision insurance cover vandalism?
No, vandalism is not covered under collision but may be covered under comprehensive.
Does collision insurance cover other vehicle drivers?
No, collision coverage only applies to damage to the policyholder’s vehicle in a covered collision. If you are at fault in an accident your liability insurance will cover damage to the other vehicle.
What if I have an accident and only have liability insurance?
Liability covers other parties if you’re at fault in an accident. But it doesn’t cover your vehicle. To cover your car you need collision insurance.
Is collision insurance needed for older vehicles?
The age of your vehicle doesn’t determine if you need collision insurance. If your car is financed or leased your lender or leasing company may still require it. For paid off cars consider the car’s current value when deciding. Since collision insurance pays out to the car’s actual cash value when the accident occurs you need to evaluate the return on your policy. Since older cars lose value over time, having coverage may still be worth it if your vehicle still has value.
Will my car insurance rates go up if I file a collision claim?
Filing a collision claim will usually increase your rates as insurers will consider you a higher risk driver. But the amount of the increase depends on your insurer, location and driving history.
Does collision insurance cover hit and run accidents?
This depends. If your vehicle is hit while parked, your policy may cover the damages. But it doesn’t cover bodily injury from a hit and run. Collision insurance is a great add on to your auto insurance policy.
