Collision Car Insurance: How It Works

Collision car insurance can come in handy if you need to repair your car after colliding with an object, even if you’re at fault. It’s usually optional coverage that can reduce your out-of-pocket expenses after a loss and give you some additional peace of mind.^[1] But if you finance or lease your vehicle, your lender or leasing company will require you to purchase full-coverage car insurance, which includes collision coverage.

Here’s what you need to know about collision car insurance, and how to compare car insurance quotes to find the best price for the coverage you need.

How collision coverage works

With collision car insurance, you’ll protect yourself from the high out-of-pocket costs that you might face if your car needs repairs or replacement after an accident. It may kick in regardless of who was at fault. This is especially important as repair costs have dramatically increased in the past year.

If you’re in an accident and have collision coverage, you can file a claim to help you pay for the damage your vehicle sustains. In most cases, you can file the claim right after the accident.

If you’re at fault in an accident, your collision will cover the repairs to your vehicle, while liability insurance covers the damages to the other drivers’ vehicles. If the other driver is at fault, their liability insurance will pay for your car repairs, up to their policy limits. Additionally, if you caused a single-car incident — like backing into a pole, hitting a mailbox, or flipping your car over — you can file a collision claim with your insurance company to cover the needed car repairs or replacement.

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What collision insurance covers

Collision coverage helps pay for repair bills if your car sustains damages in an accident or the cost to replace your vehicle if your insurer declares it a total loss after an accident. Here are several common situations in which it may apply:^[1]

• An accident with another vehicle that’s parked or in motion

• An accident with an object, like a fence, telephone pole, or guardrail

• An accident that involves a pothole or ditch

• A vehicle rollover

• A hit-and-run accident if you’re unable to use uninsured motorist coverage

What collision insurance doesn’t cover

While collision car insurance covers many situations that a basic liability-only policy won’t cover, it won’t pay out for the following:^[1]

• Damage to someone else’s vehicle

• Car theft (comprehensive coverage pays for theft)

• Bodily injuries

• Weather-related damage, like flood or hail damage (but your homeowners policy might cover these)

• Accidents with animals

Comprehensive vs. collision coverage

Because collision and comprehensive coverages pay for vehicle repair and replacement costs in different situations, insurance companies typically sell them together. Collision coverage is for incidents related to hitting objects. It may help you out if you crash into a guardrail or another vehicle, for example.

Comprehensive coverage typically applies to non-collision events. These might include theft, vandalism, floods, animal encounters, and falling objects.

In general, comprehensive coverage is less expensive than collision coverage. Since it covers a wide variety of incidents, it’s the more affordable option. But if you want to make sure that all your bases are covered, it might make sense to purchase both comprehensive and collision coverage.^[3]

Determining whether collision coverage is necessary

If you own your car free and clear, collision insurance is optional. But if you have a loan or lease, you may need to purchase it. This will protect the lender if your car sustains damages in an accident or your insurer declares it a total loss.^[2]

Even if you don’t have to buy collision coverage, it might be worth considering. Without it, you may be on the hook for thousands of dollars to repair or replace your vehicle after an accident. Collision coverage can save you from an unexpected financial burden.

While collision insurance can be beneficial, it also increases your premiums. In addition, it includes a deductible, which you have to pay before your policy kicks in and covers the rest of your repair or replacement costs. It's important to weigh factors like the value of your vehicle, your ability to pay out-of-pocket, your budget, and more before deciding to purchase collision insurance.

Cost of collision car insurance

On average, collision car insurance costs $290 per year, according to the Insurance Information Institute.^[1] But the actual price you pay depends on other factors, like your vehicle’s make and model, your age, and your driving history.

Before you choose a policy, consider the deductible, or the amount you have to pay out of pocket before your coverage applies. The lower your deductible is, the higher your premium will be.

If you have a $1,000 deductible, for example, the added cost of adding collision insurance to your policy is $84 per month. This amount decreases to $36 per month if you opt for a $2,000 deductible.

Collision car insurance FAQs