Understanding Auto Collision Insurance: What You Need To Know

Collision insurance is an optional coverage that reimburses or pays for repairs or replacements of your car when it's damaged in collisions with another vehicle or object, such as a tree or a guardrail. It covers the cost of repairs or replacements regardless of who is at fault and can also pay for hit-and-runs, roll-overs, and damage caused by uninsured or underinsured drivers. Collision insurance is often added as an extension of a basic automobile policy and can provide peace of mind for drivers, especially those with expensive cars who wish to avoid paying out-of-pocket for substantial repairs.

What does collision insurance cover?

Collision insurance covers the cost of repairing or replacing your vehicle if it is damaged in an accident, regardless of who is at fault. This includes collisions with another vehicle or an object, such as a guardrail, tree, fence, or pole. It also covers hit-and-run incidents and accidents caused by uninsured or underinsured drivers.

In some states, such as Massachusetts, collision insurance applies regardless of fault and can provide coverage in hit-and-run situations. It is worth noting that collision insurance does not cover damage caused by a collision with an animal, wind damage, or damage from a falling object.

Collision insurance is typically an optional coverage that you can add to your auto insurance policy. However, if you are leasing or financing your vehicle, your lender or leasing company will likely require you to have collision insurance to protect their financial investment.

Collision insurance provides financial protection against the physical damage that can occur in an accident. It covers events within a driver's control or when another vehicle collides with your car. This type of insurance can be expensive, but you can save on premiums by choosing a higher deductible.

What doesn't it cover?

Collision insurance is a type of auto insurance that covers damage to your own vehicle in the event of a collision with another vehicle or object. It is important to note that collision insurance does not cover all types of damage and there are certain exclusions to what it covers. Here are some things that collision insurance typically does not cover:

• Damage to other vehicles or objects: Collision insurance only covers damage to your own vehicle and does not reimburse for damage caused to other vehicles or objects involved in the accident.
• Bodily injuries: It does not cover medical costs for injuries sustained by you or your passengers in the accident, nor does it cover injuries caused to others.
• Personal belongings: Any personal items inside your car that are damaged in the accident are not covered by collision insurance.
• Normal wear and tear: Collision insurance does not cover repairs or replacements due to normal wear and tear on your vehicle.
• Damage from non-traffic events: Collision insurance typically does not cover damage caused by events such as extreme weather, theft, or collisions with animals. For example, if a tree branch falls on your car during a storm, this would not be covered. Comprehensive insurance is typically needed for these types of incidents.
• Damage below the deductible: If the cost of repairs is less than your deductible, you will have to pay for the repairs yourself.

When to drop collision insurance?

Collision insurance covers the cost of repairing or replacing your car if you crash into another vehicle or object, such as a tree or guard rail. It is not required by law, but lenders and leasing companies usually require it.

• Your car's value is low: If your car is worth only a few thousand dollars, the cost of collision insurance might not be worth it, especially if you have a high deductible.
• You can cover the cost of repairs yourself: If you have enough savings or disposable income to cover potential repairs, you may want to drop collision insurance.
• You rarely use your car: If your car spends most of its time in the garage, the cost of collision insurance might seem unnecessary.
• Insurance premiums are high relative to your car's value: If your annual collision insurance cost is more than 10% of your car's value, you may want to reconsider. This is especially relevant for older vehicles.
• You can afford the repairs, but they are less than your deductible: In this case, maintaining collision coverage might not be economical.
• You would rather replace your car than repair it after an accident: If you would prefer to buy a new car than fix a heavily damaged one, collision coverage might not be necessary.
• You are a safe driver: If you are unlikely to cause an accident, you may be better off claiming on the other driver's insurance if they are at fault.

Is collision insurance required by law?

No state legally mandates that drivers have collision insurance. However, if you're leasing or financing your car, your lender may require you to have it. This is to protect their investment in a vehicle that's not yet fully paid off.

Even if you own your vehicle outright, collision insurance might be worth buying for peace of mind. This is especially true if you drive an expensive car or wouldn't be able to pay for repairs after a crash.

If you decide to buy collision insurance, you'll need enough to cover the value of your car in the event of a total loss. You can lower the overall cost by carrying the highest deductible that fits your budget.

Collision vs comprehensive insurance

Collision and comprehensive insurance are both optional forms of vehicle insurance that protect your car from damage. However, they differ in the type of incidents they cover.

Collision insurance covers damage to your vehicle in the event of a collision with another vehicle or object. This includes accidents involving other cars, regardless of fault, single-car rollovers, and accidents with stationary objects like road signs and guardrails. Collision insurance will help pay the costs of repairing or replacing your vehicle, even if you've collided with a driver who does not have insurance.

Comprehensive insurance, on the other hand, covers non-collision damage to your vehicle. This includes damage from fire, hail, vandalism, falling trees, weather, and theft. It also covers damage from collisions with animals. Comprehensive insurance is useful if you live in an area with a high risk of vehicle damage due to fallen branches or animals crossing the road.

Neither collision nor comprehensive insurance is required by state law in the US. However, if you finance or lease your vehicle, your lender may require you to carry both types of insurance. While collision and comprehensive insurance are often sold together as a package, they can also be purchased individually. The cost of each depends on factors such as the value of your vehicle, the deductible you choose, your location, and your driving record. Collision insurance typically costs more than comprehensive insurance.

Frequently asked questions