Collision coverage is the type of auto insurance that pays to repair your car in the event of an accident. This type of coverage will cover your car only. It will not cover damage you caused to other vehicles; that is where liability coverage comes into play.
Collision coverage will cover damages done to your automobile even if the accident is ruled to be your fault. It is designed to provide money to repair your car regardless of the type of accident that occurs. (Note that collision coverage only causes damage sustained in automobile accidents. For damage that is caused by things unrelated to collisions, like natural disasters, theft, falling objects, etc., you need to have comprehensive coverage.)
Continue reading below to learn more about this type of auto insurance coverage, or use the navigation links below to skip to the section of your choosing.
- Do you need to purchase collision coverage? Is it illegal not to?
- How does collision coverage work? What happens if you get into an accident?
- Should I buy collision coverage? Or should I not?
- How much does collision coverage cost to buy? Where do I go to buy it?
Is collision coverage required by law?
Collision coverage is not required by law in the United States if you own your vehicle. To view information about which types of insurance are required by law, check out our page on the subject here.
Although it may not be required by law if you own your vehicle outright, it may be required by your lender if your car is leased or financed. If this is the case, check the laws of your contract to see if is required.
How does collision coverage work?
Like stated above, collision coverage pays you for damage done to YOUR vehicle. It can pay for damage that you cause to your vehicle and can also pay for damage done to your vehicle in an accident that you did not cause.
That’s right. Even if you did not cause the accident, collision coverage will still pay to repair damage done to your vehicle. Although your liability coverage will also cover these damages, it might take a long time to seek reimbursement from the insurance company of the driver who did cause the accident. By having collision coverage, you will not have to deal with the other person’s insurer and the repair and claim process will go much smoother.
So, in the event of any accident, if you have collision coverage, you will not need to worry. To get the repairs done, all you need to do is first pay your deductible and then your insurance company will cover the rest (up until the limits you purchased).
Is it a good idea to buy collision coverage?
If your car is new, luxury, classic, or just plan expensive to repair (think European cars), then collision coverage is recommended. If your car is leased of financed, it might even be required by the terms of your contract to get it (like stated above).
If you drive a clunker that doesn’t cost much to repair, you might consider doing without collision coverage. Collision coverage can be expensive, and if you continue to make payments on it without using it (AKA you never get into an accident), then the amount you spend can quickly surpass the actual cash value of your vehicle. Like stated above, collision coverage is not required by law. If you decide to purchase it, you need to look at the value of your car and the cost of the collision coverage payments over the long term to see if it is worth it for you.
Progressive.com (website of one of the best auto insurance companies) has a great guide discussing whether or not it is smart to drop collision coverage. They say:
Your personal situation purely drives this decision. If you have a $1,000 collision deductible on a vehicle that’s worth $1,000, you’re basically paying for insurance that’s not going to pay you when you need it. Some people choose higher deductibles because the premium is lower, which means up-front costs are lower. Think about this before making your decision. Focus on what you can handle, including time and money considerations, before you decide. You may be surprised at what you discover.
To view this guide to discover more about collision coverage, click here.
How much does collision coverage cost?
Like auto insurance in general, the cost of collision coverage depends on a number of factors like the make and model of your vehicle, the year it was manufactured, your age and gender, as well as your accident history and traffic violations.
If you have many accidents on your record, then the insurance companies will most likely charge you more for collision coverage. The reason for this is simple and quite obvious – they believe you are more likely to get into an accident and therefore more likely to cost them money to repair your vehicle.
But, to be honest, the only person who can tell you how much your collision coverage will cost is the insurance companies themselves. To get a quote for collision coverage, compare quotes online using price comparison websites or pick up the phone and talk to your insurance agent.