Search
  • CIIG

What to Know About Collision Insurance



Statistics show that an average of 6 million car accidents happen in the U.S. annually. Among these crashes are collisions which can be cash-draining to the victims. The only way to financially soften the impact of car collisions is by getting collision insurance.


Car collision insurance is an insurance cover designed to help you pay your car's repair costs if it's involved in a collision. It covers a collision with another vehicle or an object, such as a fence or a tree. Some collision insurance covers can help you pay for a single-car accident involving rolling or falling over.


Let's dive deeper into collision insurance and why you should get it for your car.


What is Collision Insurance?

Collision insurance covers the expenses for replacement and repairs to your car if it's involved in a collision. Typically, the vehicle must have been in motion when the accident occurred.


Collision insurance claims are fileable and issuable regardless of who's at fault in the accident, unlike liability insurance.


Getting collision insurance is not a legal requirement, unlike car liability insurance.

According to statistics, auto insurance can cost upwards of $1,771 annually. Therefore, adding collision insurance to your monthly or annual budget is based on your interest in securing your car from the financial impact of accidents.


The Difference Between Collision Insurance and Comprehensive Auto Insurance

Collision insurance only covers damages from an accident involving other cars or objects. For other kinds of damages, you need comprehensive auto insurance.


Comprehensive auto insurance extends your vehicle's coverage to damages caused by a tree falling on your car during a storm, hitting a deer while driving at night, and other non-crash damages.


Comprehensive car insurance also reimburses you in case of car theft or theft of parts of your car. You also get coverage against civil disturbances such as riots and broken windshields.


Car insurance companies often sell collision insurance and comprehensive insurance as one package since they offer better coverage to the car owner.


According to the Insurance Information Institute, 79% of insured drivers also purchase comprehensive coverage, while 75% purchase collision insurance.


What's the Coverage of Collision Insurance?

Collision insurance covers car damages resulting from hitting another vehicle or an object. The full coverage typically spans:

  • A collision with another vehicle

  • A collision with an object such as a tree, fence, or pole

  • Damage caused by road hazards such as potholes

  • Single-car accidents such as your vehicle flipping, rolling, or falling over

Therefore, you can claim collision insurance if the following events happen:

  • You swerve to avoid an animal and hit a pole

  • Your car slides on ice and hits a fence or a guardrail

  • Someone hits your car in the parking lot and drives off

What Doesn't Collision Auto Insurance Cover?

Collision insurance doesn't cover damages caused by the weather, animals, and other environmental factors unrelated to car accidents. In some cases, damages to your car when parked may also not be covered.


Here're a few examples of what's not included in collision insurance coverage:

  • Collisions with a deer or large animal

  • Hail, fire, or flood damage

  • Damage to another person's property

  • Damage from something falling into the vehicle, such as a tree or boulder

  • Damage from theft or vandalism

  • Medical expenses for any accident

Medical expenses are covered by a medical payment (MedPay) or personal injury protection (PIP) policy. Liability insurance covers damages to other people's property caused by your vehicle.


What are the Limits of Collision Insurance Coverage?

Collision insurance coverage has deductibles and policy limits.


Deductibles

Collision auto insurance has a deductible you must pay out of pocket before the insurer can pay for your claim. Typically, you'll have the flexibility of choosing the amount of collision deductible you want in your policy, which will dictate the premiums of the policy you'll get.


Typically, collision insurance deductibles range from $0 to $1000, depending on the insurer. The lower the deductible, the higher the premium you'll have to pay.


Remember, deductibles are out-of-pocket payments that must be made before your insurance claim is honored. Therefore, if you choose a $1,000 deductible, you must foot $1,000 worth of repair costs out of pocket before making a claim.


The best way to determine your deductible is by keeping the value of your car in mind. Generally, collision insurance is recommended when your annual premium is less than 10% of the car's value. This is often the case for newer or more expensive cars.


Therefore, if you have a very old car or your car's value is too low, purchasing collision insurance on top of liability insurance may not be financially sound. However, if you're not sure of the residual value of your car, then getting collision insurance with the premiums is still a sound decision.


Policy Limits

Collision coverage also has a limit. This is the maximum amount your policy can pay towards covering damages. Typically, the collision coverage limit is the vehicle's actual cash value. This is the value of the car minus depreciation.


For instance, if your car is totaled in a covered collision, your insurer will cut you a check equal to the car's depreciated value minus the deductible. Since the insurer uses the depreciated value, the check might not be enough to replace the vehicle with a newer make or model. You might have to dig into your pockets to do that.


How Much is Collision Insurance?

According to 2019 data from the National Association of Insurance Commissioners (NAIC), collision insurance in the U.S. costs an average of $381.43. Average premiums vary widely by state, with the cheapest being South Dakota, where drivers pay an average premium of $248.09.


Washington DC is the most expensive state, with collision insurance premiums averaging $539.48.


Why Should You Get Collision Insurance?

Although not required by law, getting collision insurance is a smart option, no matter how careful of a driver you may be. There's so much on the road that's out of your control. Therefore, it makes sense to get coverage against collisions instead of taking the risk of paying heftily out of pocket in case they occur.


Collision coverage is also an excellent supplement to standard liability insurance and comprehensive insurance.


It's also advisable that new drivers, such as teens with less road experience, get collision insurance since they're at higher risk of getting into an accident involving a collision.


Get a Good Policy from a Trusted Insurance Provider

Collision insurance is essential coverage that you should consider adding to your auto insurance. It will protect you against several on-road risks that can damage your vehicle and be costly to repair. Contact a reputable insurance provider today to get the best policy within your state.