Collision Car Insurance: How It Works
Collision insurance is an optional coverage that can pay to repair or replace your car after an accident, regardless of fault.
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Written byAnna Baluch
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4+ years writing insurance and personal finance content
MBA from Roosevelt University
Anna leverages her personal finance and insurance knowledge to create educational content that helps people make smart financial decisions.
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Edited byCourtney Mikulski
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Courtney MikulskiSenior Editor, Auto
3+ years producing insurance and personal finance content
Main architect of the Insurify Quality Score
Courtney’s deep personal finance knowledge extends beyond insurance to credit cards, consumer lending, and banking. She thrives on creating actionable content.
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Reviewed byDaniel Roccato
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30+ years in financial services
Clinical Professor of Finance, University of San Diego
Dan is a well-recognized and widely quoted financial services expert, regularly appearing in a variety of national and local media as a subject matter expert.
Updated November 20, 2024
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Table of contents
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.
Quick Facts
Collision insurance costs an average of $290 a year, according to the Insurance Information Institute.[1]
It covers collisions with other vehicles or objects, like hitting a pole or mailbox, and rollovers.
While states don’t typically require collision coverage, your auto lender or lessor will likely require it as part of full-coverage insurance.[2]
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.
Good to Know
When you file a collision claim, you pay a deductible that you chose when you purchased the policy. Then, your insurance company will take care of the remaining cost to repair your vehicle. Let’s say your collision policy has a $1,000 deductible and your repairs cost $2,500. In this situation, you’d pay $1,000 out of pocket and your insurer would cover the additional $1,500.
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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.
Recent quotes for other Insurify users
Recent car insurance prices for Buick, RAM, Hyundai, and more. Insurify features quotes from 100+ carriers including Sun Coast, Root, and Just Insure.
*Quotes generated for Insurify users within the last 10 days. Last updated on November 20, 2024
Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from November 20, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
*Quotes generated for Insurify users within the last 10 days. Last updated on November 20, 2024
Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from November 20, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
Collision car insurance FAQs
Read Insurify’s guides on auto body repair costs and how much your insurance may pay for a totaled car. For more information, here are the answers to some frequently asked questions about collision car insurance.
Is collision insurance mandatory?
Sometimes. State laws don’t require collision coverage — it’s usually optional. But if you took out a lease or loan to purchase your vehicle, your lender or leasing company may require it.[2] Once you own your vehicle outright, you can determine if you should keep or drop your collision coverage.
Does collision insurance cover rental car accidents?
When you rent a car, you may pay extra for collision coverage, commonly called a loss of damage waiver or a collision damage waiver. With a waiver, you won’t be responsible for any collision damage that your rented vehicle might face. If you already have collision insurance on your auto policy, however, it might apply to your rental car.[4]
Does collision insurance cover other drivers’ damages?
No. Collision coverage only kicks in when your vehicle sustains damage after a covered incident. If you’re liable for a car accident, your liability coverage can apply and cover the injuries and repair costs that another driver may incur.
Does collision insurance cover hit-and-run accidents?
It depends on the policy and the details of the hit-and-run. If a driver hits your vehicle while it’s parked, collision coverage or uninsured motorist property damage coverage may apply.
What is a collision deductible waiver?
Also known as a CDW, a collision deductible waiver is an optional feature that some insurance companies offer. It waives your collision deductible if another driver was at fault for a collision. Since a deductible can be as much as $2,000, a collision deductible waiver might be worth it.
What’s the best way to determine a collision deductible?
Before you choose a collision deductible, consider your monthly budget, as a higher deductible leads to a lower monthly premium. Also think about your savings and make sure you have enough money to cover the deductible you choose. In addition, factor in your risk tolerance and what you’re comfortable paying.[5]
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Sources
- III. "What is covered by collision and comprehensive auto insurance?."
- III. "Auto insurance basics—understanding your coverage."
- Colorado General Assembly. "Optional Automobile Insurance Coverage."
- III. "Rental car insurance."
- III. "Understanding your insurance deductibles."
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Anna BaluchInsurance Writer
Anna Baluch is a Cleveland-based personal finance and insurance expert. With an MBA from Roosevelt University, she enjoys writing educational content that helps people make smart financial decisions. Her work can be seen across the internet on many publications, including Freedom Debt Relief, Credit Karma, RateGenius, and the Balance. Connect with Anna on LinkedIn.
Courtney MikulskiSenior Editor, Auto
3+ years producing insurance and personal finance content
Main architect of the Insurify Quality Score
Courtney’s deep personal finance knowledge extends beyond insurance to credit cards, consumer lending, and banking. She thrives on creating actionable content.
Featured in
30+ years in financial services
Clinical Professor of Finance, University of San Diego
Dan is a well-recognized and widely quoted financial services expert, regularly appearing in a variety of national and local media as a subject matter expert.
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