Collision Coverage
What does collision insurance cover?
Collision coverage covers damage to your vehicle regardless of who is at fault. The damage can result from hitting another vehicle or an object, or overturning. Depending on the policy, it may also cover damage incurred while driving a vehicle that you don’t own, such as a rental or a friend’s car. It does not cover damage to another car damaged in the same collision.
Collision coverage is usually subject to a deductible—ranging from $100 to $1000—after which the insurance company will either reimburse you for the cost of the repairs or for the value of the vehicle at the time of the accident if the cost of repairs is judged to be more than the value.
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Most drivers carry collision coverage to avoid having to pay out-of-pocket for expensive repairs as well as to protect them against losing the entire value of their car in an accident. Collision coverage can also pay for damage not covered by underinsured or uninsured driver liability coverage.
How much collision coverage do I need?
As a general rule, you should take the highest deductible you can afford, since the purpose of collision coverage is to protect you from large losses. Coverage for new and expensive cars costs more than coverage for older and less expensive cars. If you have a luxury car or know that the value of your car is high, you will definitely want to have collision coverage. But since your car loses value as it ages, especially after five years, you may want to periodically reevaluate the costs of collision coverage versus your car’s value. For example, if your car is worth $2000 and you pay $300 per year for collision coverage and have a $500 deductible, it may not be worth it to you to keep paying premiums.
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*Auto Insurance Options is a free information resource that provides content on auto insurance products and policies for informational purposes only, but is not an agency or insurer. Products and policies may not be available in all states.
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