Collision insurance coverage pays to repair damages or refunds you for the cash value of your vehicle if it is totaled when you collide with something while driving.
Once your car is fully paid for, you no longer have a lender who mandates that you carry collision coverage, so it becomes an option. Learn what is covered and when it makes sense to carry collision insurance.
What Is Collision Coverage?
Collision coverage insures the costs for repairs or your car only, not for any other cars or drivers. In most states, it only applies when you are at fault in an accident or if your car suffered damage and you do not know who or what caused it.
For the purpose of filing a claim, your car insurance policy must define a “collision” very clearly. Your car must hit either with another car or it must come into contact with an inanimate object, such as a fence, guard rail, pothole, or pole.
How Collision Coverage Works
Most states have laws that require all drivers to have some degree of insurance coverage if they plan to drive a vehicle in the state, often to cover bodily harm and liability for property damage.1 Collision coverage is not always part of these basic mandates though. You may choose to add collision coverage onto your current car insurance policy whether or not your state demands it. This could pay off in the long run, since repairs to your car after a crash could be massive. A crash becomes even more costly if you are renting or leasing a car. On average collision coverage will cost you an extra $290 per year.2
No matter what state you live in, if you’re still making payments on your car you may need to protect it. If you took out a loan in order to buy your car, your lender may demand that you purchase collision coverage so their asset is covered should something happen to damage it.
What Types of Events Are Covered?
There are many cases that count as “collisions” that fall under this type of policy:
If your vehicle crashes into another car (whether you hit a car or the other driver hits you), you are in a collision. Collision coverage will apply to at least one of the cars involved. If the at-fault driver did not select collision coverage, they will have to pay for their own repairs for their vehicle.
Although running over a pothole might be easy to avoid, if this happens to you and your car suffers damage, the odds are in your favor that repairs will be covered. Insurers treat pothole damage as a collision. Again, this type of coverage must be selected in your main car insurance policy for repairs to the vehicle to be covered.
Funny enough, it matters whether you hit the tree or the tree hit you. A falling tree is part of a comprehensive claim. Hitting a standing tree or even a tree which fell prior to you hitting it is filed as a collision.
To put it simply, hitting any static object is defined as a collision. Slamming into or even just lightly scraping a guard rail, stop sign, mailbox, or building would all count. It does not matter if the damage is a small scratch or a crushing blow. The bottom line is that contact with an object that is not alive and not in motion and results in damage to your vehicle is a collision.
Trenches and Ditches
If you’ve ever been on icy roads and slid into a ditch, or had to swerve to avoid hitting a bump in the road and landed in a trench, you’ll know that a ditch or trench can cause major damage to your vehicle. Earth shoved up into the undercarriage of your car can clog any number of functions, and chances are you’ll need a trip to a mechanic. Rolled vehicles are even more at risk for damage. Physical damage all over the car (so long as it’s not from a type of peril that is covered elsewhere) will always be covered under the collision portion of your policy.
Types of Collision Coverage
Is it a repair or total loss? If you have collision coverage, your insurer has two options for making you whole again. Either your vehicle will be fully repaired, or the cash value of your car will be paid out in the case of a total loss. Here’s what to expect:
What to Expect If Your Car Can Be Repaired
In most cases, aftermarket parts or used parts will be used to repair your vehicle because they are cheaper. If you prefer original parts for your make and model from the manufacturer (OEM parts), you will have had to select an extra rider to your policy when you first signed up. Some insurers offer this option and some do not, so if the source of the parts matter to you, be sure to ask about OEM parts and terms when you sign up.3
The repairs to your vehicle should return your vehicle to the state it was in before the event, as if the damage never happened. This is good news, so you know there will be no cutting corners.
Any recent repairs or parts that you have had replaced can help to increase the cash value of your car. Find receipts for any recent car repairs you have had done to help ease this process, and get a better payout.
Collision coverage most often comes with a deductible. You will need to pay this dollar amount out of pocket before the insurance kicks in to cover the rest of the cost of repairs.
The deductible is set up at the time you add your vehicle to your car insurance policy, and will be listed in your contract.
What to Expect If Your Car Is a Total Loss
If your vehicle is a total loss, an insurance claim adjuster will work with you to figure out what the real cash value of your car was at the time of loss. This won’t be the same amount you paid for the car, because time has passed and wear and tear will factor in to the new value. Current market value for your car at the time the damage happened may also be a factor.
Does It Matter Which Driver Is at Fault?
It may not always be clear who is at fault in the case of a crash. It can happen that both parties involved insist they were not at fault. If this happens to you, you can file a claim under your collision coverage and have your insurer work on subrogating for you.
Subrogation means you try to get reimbursed for a claim after fault is determined. It allows you to get your vehicle fixed right after the event. It also allows you to get reimbursed right after the repair, without having to wait for an agent to figure out who was at fault. Then down the road if the claim goes in your favor and you are reimbursed, this can wash away your at-fault claim status. There is no law stating that your insurance company needs to help subrogate a claim for you. But many codes of ethics do require it. You may want to talk to your agent about how they treat pay-outs when fault is still in question.
If you live in Michigan, you may have greater coverage than drivers in other states when it comes to fault or no-fault issues. Due to reforms to no-fault insurance in this state, as of 2020 you may be able to get help paying for medical costs that arise from injuries in a crash, no matter who is at fault.4
No matter what state you live in, if you are at fault in a crash (meaning you are the driver who caused it), you must have collision coverage selected on your car insurance policy to be paid for either damage repair or the full cash value in case of a total loss.
- Collision coverage insures against the cost to repair or replace your car when it strikes a vehicle or object.
- Drivers must elect collision coverage be part of their policy, as it is not the default or mandate.
- Unless you opt for an extra rider that pays for original manufacturer parts, your car will be repaired with used or aftermarket parts.
- States differ in how they treat issues of driver fault, and also the level of coverage needed to drive in the state.