Collision insurance is an optional auto coverage that pays to repair or replace a policyholder's car after a crash. Collision insurance applies to at-fault accidents, single-vehicle crashes, rollovers, hit-and-runs, and collisions with roadside objects. Liability insurance does not pay for damage to the driver's own car. A driver with liability insurance alone pays the full repair bill after an at-fault crash. According to NHTSA, 4,467,244 property-damage-only crashes occurred across the U.S. in 2024. Lenders and leasing companies require collision insurance on financed and leased cars until the loan or lease ends. Insurance Navy helps drivers find the right insurance at the right price. This guide explains collision insurance coverage, exclusions, deductibles, costs, and lender requirements.
Table of contents
- What is Collision Insurance?
- What Does Collision Insurance Cover?
- What Damage is Not Covered by Collision Insurance Coverage?
- Collision vs. Comprehensive Coverage
- What are the deductibles for Collision Insurance Coverage?
- Does Collision Coverage Include a Vanishing Deductible?
- How Does Collision Insurance Work When You File a Claim?
- How Much Does Collision Insurance Cost?
- Who needs Collision Insurance Coverage?
- When a Lender or Leasing Company Requires Collision Coverage
- When to Drop Collision Coverage
- FAQs
- Is collision insurance required by state law?
- Does collision insurance cover me if I damage someone else’s property?
- Does collision insurance cover rental car accidents?
- Does collision insurance cover animal accidents?
- Does collision insurance cover vandalism?
- Does collision insurance cover other vehicle drivers?
- What if I have an accident and only have liability insurance?
- Is collision insurance needed for older vehicles?
- Will my car insurance rates go up if I file a collision claim?
- Does collision insurance cover hit and run accidents?
Collision insurance is an optional auto coverage that pays to repair or replace a policyholder's vehicle after a crash, minus the deductible. Collision insurance applies to at-fault accidents, single-vehicle crashes, rollovers, hit-and-runs, and collisions with roadside objects.
What is Collision Insurance?
Collision insurance is a coverage that a driver adds to a liability policy. Liability insurance pays for damage the driver causes to other people's vehicles and property. Liability insurance does not pay for damage to the driver's own car. Collision insurance pays for damage to the driver's own car. The deductible and the car's actual cash value set the payout amount.
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.
Collision vs. Comprehensive Coverage
Collision insurance pays for crash damage to your car. Comprehensive insurance pays for damage from theft, fire, vandalism, weather, falling objects, and animal strikes.
Question | Collision | Comprehensive |
|---|---|---|
Crash with another car or object | Covered | Not covered |
Rollover or single-car crash | Covered | Not covered |
Theft, vandalism, fire | Not covered | Covered |
Hail, flood, falling tree | Not covered | Covered |
Hitting a deer | Not covered | Covered |
Deductible applies | Yes | Yes |
Required by state law | No | No |
Comprehensive coverage costs less than collision coverage. Comprehensive coverage pays for losses that careful driving cannot prevent, such as theft and hail.
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 choose the deductible when you buy the policy. A higher deductible lowers the premium.
A smaller deductible means you'll personally pay less out of pocket for your vehicle repairs.
Does Collision Coverage Include a Vanishing Deductible?
Some insurers sell a vanishing deductible add-on, also called a disappearing deductible. Each claim-free year reduces the collision deductible by a set amount, such as $100, until the deductible reaches zero. A claim resets the credit. The add-on costs extra. Compare the add-on price against the deductible savings before you buy the add-on.
How Does Collision Insurance Work When You File a Claim?
A collision claim pays to repair your car. A collision claim pays to replace your car when the repair cost exceeds the car's actual cash value. The insurer's adjuster inspects the damage, sets a repair estimate, and pays the repair shop or you.
Numbered list:
Report the crash. File the claim with your insurer. File a police report for a hit-and-run.
Get the estimate. The adjuster or an approved repair shop prices the repair.
Repair or total loss. The insurer pays for repairs when the repair estimate is below the car's actual cash value. The insurer declares a total loss when the repair estimate is above the car's actual cash value. You receive the actual cash value on a total loss.
Pay the deductible. The insurer subtracts the deductible from the payout. A $4,000 repair with a $500 deductible pays $3,500.
Deductible refund. When another driver caused the crash, your insurer can recover the payout from that driver's insurer and refund your deductible.
About 4.2% of drivers with collision coverage file a collision claim in a year. The average collision claim is about $5,489. Both figures come from Insurance Information Institute data for 2024.
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 Insurance Information Institute puts the average cost of collision coverage at about $290 per year. The Highway Loss Data Institute reports average collision losses of $604 per insured vehicle year for 2022 to 2024 model-year vehicles. The price of your collision coverage would be added to your legally required liability auto insurance policy.
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?
About 4 out of 5 drivers carry collision and comprehensive coverage, according to the Insurance Information Institute. 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 collision payout rises with the car's value. Collision coverage on a high-value car protects a large repair or replacement cost. The payout on an aging car shrinks as the car loses value.
Car is financed or leased - The loan or lease contract requires collision and comprehensive coverage until the loan or lease ends. Many lenders also require gap insurance on a new car.
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.
When a Lender or Leasing Company Requires Collision Coverage
No state requires collision insurance. Lenders and leasing companies require collision insurance because the car is the collateral for the loan or lease. The finance contract sets the maximum deductible the borrower may carry, usually $500 or $1,000. A lender can buy force-placed coverage when the borrower drops collision coverage while the loan is open. The lender adds the cost of force-placed coverage to the loan payment. Force-placed coverage protects the lender's interest, not the borrower's interest.
When to Drop Collision Coverage
Drop collision coverage when the largest possible payout no longer justifies the premium. On a car worth $3,000 with a $500 deductible, the largest possible payout is $2,500. A driver who pays a premium plus a deductible close to $2,500 pays close to the car's value to insure the car. Check the car's value at each renewal. Keep collision coverage on any car you could not replace from savings.
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