What Is Collision Insurance?
Collision insurance may appear to be basic, but it does not cover all costs incurred as a result of a collision. When you hit another vehicle or an object like a lamppost or a fence, collision coverage pays to repair the damage to your own automobile. It may also cover you if another driver hits your car and doesn’t have adequate insurance to cover the costs.
Collision insurance isn’t required in any state, but it’s usually required by lenders if you finance or lease a vehicle. Here’s a rundown of what collision auto insurance will — and won’t — cover, as well as how to figure out if it’s worth the money.
What is covered under collision insurance?
Collision insurance protects your car from the following types of damage:
- You create a collision with another driver.
- A collision with a stationary object, such as a mailbox or a tree.
- Your vehicle is rolling over.
If another driver hits your car and they don’t have enough or any insurance to pay the costs of damage, and you don’t have uninsured/underinsured motorist property damage coverage, you could be sued.
If you’re in a car accident and another driver is totally to blame, their property damage liability insurance covers your vehicle. You’d file a claim with their insurance first, assuming they have it. Except for New Hampshire, which does not require auto insurance, every state requires this coverage.
However, several states have low minimum limitations, such as $5,000 or $10,000. If a vehicle is totaled, a motorist with only the state-mandated property damage limits will not be able to afford a newer vehicle. Your collision insurance would kick in after that.
This is one of the reasons why, whether you’re leasing or paying off a car, lenders require collision and comprehensive coverage: If your car was totaled soon after purchase, you could be in default on your auto loan, owing thousands of dollars.
Full coverage insurance is often defined as collision and comprehensive insurance paired with liability insurance.
What is a collision insurance deductible and how does it work?
Typically, collision insurance has a deductible, which is a predetermined sum deducted from any claim payment. Your deductible amount, which normally runs from $500 to $1,500, is up to you.
For instance, suppose you swerved to avoid hitting a squirrel on the road and instead hit a lamppost, with a $1,000 collision deductible. The cost of repairing the damage to your car would be covered by your insurance provider, minus $1,000.
If the damage is less than your $1,000 deductible, you shouldn’t file a claim since your insurer won’t pay — and will most likely raise your rates as a result of the claim. Your insurer would deduct $1,000 from your car’s estimated worth before the incident and send you a payment for that amount if the vehicle was destroyed by the hit.
This deductible would also apply if your automobile was still drivable but the damage was too expensive to fix, and the insurer declared it wrecked. You may still fix your car, but it would be listed on the title as salvaged. Some insurers refuse to cover salvaged vehicles or charge a higher premium if they do.
Collision insurance is a type of auto insurance that compensates the insured for damage to their personal vehicle caused by the insured driver’s negligence. This sort of insurance is frequently acquired as an add-on to a normal motor policy to protect drivers in the event of collision damage.
What is Collision Insurance and How Does It Work?
Collision insurance, as the name implies, compensates the insured for losses incurred as a result of a collision. It does not cover theft or vandalism-related damage. It also doesn’t cover damage covered by another driver’s insurance, even if the other motorist was at fault.
KEY TAKEAWAYS
- Collision insurance compensates the policyholder for damage to their vehicle that occurs while they are not at fault.
- This sort of insurance is not included in a comprehensive auto insurance policy, although it is frequently added as an add-on.
- Collision insurance covers damage caused by two drivers colliding, as well as damage caused by potholes and accidents involving an inanimate item.
- Collision insurance is frequently pricey, however premiums can be reduced by selecting a $500 or greater deductible.
- Comprehensive auto insurance protects a driver from situations beyond his or her control. Collision insurance protects you from incidents beyond a driver’s control, such as when another vehicle collides with yours.
- Collision coverage is critical for protecting your vehicle from the financial losses that can result from physical damage. It’s not difficult to be involved in a car accident. Someone is always at blame in an accident, and that someone may be you.
- Collision insurance will pay for damage caused by a collision with another vehicle, a tree, a pole, or a guardrail, as well as the majority of other road hazards.
Collision Insurance Quick Facts
Collision coverage is only available when combined with liability and comprehensive coverage.
When two vehicles crash in drive or reverse, collision insurance pays to repair the damage.
If you encounter ice and slide into an inanimate object, collision insurance will cover the damage to your vehicle.
Pothole damage is covered by collision insurance.
Collision insurance is costly, but customers can save money by opting for a $500 or greater deductible.
Collision vs. Comprehensive Insurance
The key distinction between collision and comprehensive coverage is whether or not the driver has control over the situation. Collision insurance protects you from incidents beyond a driver’s control, such as when another vehicle collides with your vehicle.
Comprehensive coverage is usually classified as “acts of God or nature,” or events that are out of your control while driving. A scared deer, a severe hailstorm, or a carjacking are examples of such incidents.
To demonstrate the differences between collision and comprehensive insurance, consider the aftermath of a major storm. Let’s look at two hypothetical scenarios within that storm: First, a large telephone pole was blown down and landed on your truck, or you swerved to avoid a falling tree and collided with a guardrail. You had no control over when or why a tree fell on your car in the first instance.
This type of mishap would be covered by your comprehensive insurance. You were driving the car in the second scenario when it swerved into the guardrail. As a result, it’s a collision, and the damages are covered by collision insurance.
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What Is Comprehensive Insurance and How Does It Work?
Comprehensive insurance is car insurance that protects your vehicle against damage caused by events other than a collision. Learn about the costs of comprehensive insurance.
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