What Is Collision Insurance and How Does It Work?

What Is Collision Insurance?

Auto accidents can be costly. That’s why you’ll want collision insurance to help cover damage from another vehicle or object. For example, if your car hits a tree during a storm, this type of car insurance can help pay for your repairs.

Without it, you’ll have to pay out-of-pocket. Also keep in mind that while collision car insurance is optional, many lenders require it if you’re leasing or financing your car. 

Collision insurance is auto coverage that reimburses the insured for damage sustained to their personal automobile due to the fault of the insured driver. This type of insurance is often added as an extension of a basic automobile policy to protect drivers in the event of damage from a collision.

Collision insurance is a type of car insurance that pays for damage to your own vehicle after an accident with another vehicle. While not required by state law, you may be required to purchase a collision insurance policy if you are leasing your vehicle or owe car payments.

In this article, we at the Home Media reviews team will provide a full explanation of collision car insurance and take a look at average costs.

If you’re shopping for collision insurance, be sure to compare offers from some of the best car insurance companies in the country. By getting multiple quotes, you can make sure you choose the lowest rate for your collision coverage.

What Does Collision Insurance Cover?

Collision insurance covers damage to your vehicle when it makes contact with another object, regardless of whether you’re at fault. That object can be another vehicle or something stationary like a house, pole, tree, or fence.

This type of insurance also covers damages sustained from single-car accidents, including flips or rollovers. In some states, collision insurance may also cover hit-and-run accidents.

Collision coverage might seem simple, but it actually helps cover damages to your car from many different accidents. Collision insurance helps with accidents that involve: 

  • A collision with another vehicle or an object like a fence or tree
  • Only your car, like a rollover accident
  • Someone crashing into your parked car
  • An accident in a car you’ve rented

Your collision insurance typically won’t cover: 

  • Damage to another person, including medical bills
  • Vandalism or theft
  • Accidents with animals
  • Losses other than auto damage from a collision

To get these protections, many AARP® members choose to bundle their collision insurance with: 

What Isn’t Covered by Collision Insurance?

Collision insurance will cover damages to your vehicle, even if you’re at fault, but there are times you won’t be able to rely on this type of coverage. Your collision policy will not cover:

  • Damage to another driver’s vehicle.
  • Damage from an accident with a pedestrian or an animal.
  • Damage due to a natural disaster, weather, fire, or theft.
  • Bodily injury costs for anyone injured in your car or another vehicle.

If you want insurance that covers the situations listed above, there are other coverage options. Liability insurance, for example, will cover costs associated with physical damage and bodily injury if you’re at fault for an accident.

If you want a policy that covers natural disasters, weather damage, and theft, you may want to consider a comprehensive insurance policy.

What Is an Example of Collision Insurance?

Accidents can happen at any time and there are many reasons you might need collision insurance. For example: 

  • You swerve to avoid hitting something in the road and end up damaging your car on your neighbor’s fence.
  • You park your car for an errand and return to find damage from someone hitting your parked car.
  • You brake quickly and end up hydroplaning into a telephone pole.

What Is the Difference Between Collision and Comprehensive Coverage?

Collision insurance helps cover the costs of repair for your car if you’re in an accident with another vehicle or an accident involving an object like a fence or a tree. Comprehensive coverage, also known as “other than collision,” is usually much less expensive and covers things like: 

  • Theft or vandalism of your car or its parts
  • A tree falling on your car
  • A broken windshield
  • If you hit an animal while driving
  • A natural disaster like a hurricane or earthquake

What Are the Deductibles for Collision Insurance Coverage?

Your collision deductible is the amount you pay out-of-pocket for car insurance claims before your policy covers the rest. For example, if your deductible is $1,500 and your vehicle has $5,000 in damage, you would be responsible only for the $1,500 to pay to repair your car. Your insurance company and your collision insurance coverage would help pay the rest. 

How Much Does Collision Insurance Cost?

Like other types of insurance, collision insurance costs depend on multiple factors, though your driving history and vehicle type will heavily influence your rates.

If you drive a high-end car or one that is expensive to fix or replace, your insurance company will likely need to pay out more on a claim. That can make your collision insurance premium more expensive.

Conversely, if your car is older or relatively inexpensive, repairs and replacements are often less expensive. As such, your rates will likely be lower.

Your insurance company will also look to your driving record to determine the cost of coverage. If you have a clean driving record, the insurance company will consider you a lower risk, and your rates will be lower. If you have a history of traffic violations or accidents, you’ll likely pay more for a collision policy.

Keep in mind that the deductible you choose can also impact the cost of collision insurance. Higher deductibles can lead to lower monthly payments, though you’ll need to pay more out of pocket if you make a claim.

The cost of any insurance policy varies not only from state to state but also from driver to driver. Personal details such as your age, gender, marital status, and driving record factor into the cost of an auto policy, as do details about the vehicle you drive and where you live within your state. You can reduce your costs by setting lower policy limits or a higher deductible.

As you look for collision insurance, always shop around and compare rates from different insurance companies. Doing so will increase the chances that you’ll find an affordable car insurance policy that meets your needs.

The cost of your collision insurance can vary depending on your: 

  • car’s value
  • vehicle’s year, make, and model
  • Deductible amount

When it comes to insurance, the lower your deductible amount, the higher your premium. So, if you plan to buy auto collision coverage, selecting a higher deductible generally helps lower the cost of your auto insurance. 

You must first have comprehensive insurance coverage for your car before you can buy collision insurance. You can get a car insurance quote online to find out how much you would pay for comprehensive and collision insurance. 

Do I need collision coverage on an old car?

Maybe your car loan is finally paid off, and you’re no longer required to have full coverage on your car. Or maybe your car is close to a decade old and you’re reading a lot of financial advice columns telling you that dropping collision is a great way to make more room in your budget.

The truth is, the question around the right time to drop coverage is not an easy question to answer. It depends on your car and your circumstances. Here are a few questions you can ask yourself.

  • How much money do you have on hand? Could you come up with the funds to repair or replace your car if you had an accident tomorrow? Here’s one thing to consider. More than 6 percent of people who have collision coverage file a claim, and the average claim amounts to $3,435, according to a study by the National Association of Insurance Commissioners published on the Insurance Information Institute website. Can you afford to pay nearly $3,500 out of pocket?
  • How much is your car worth? Some will tell you to rely on the age of the car. But it wasn’t that long ago when most people thought about replacing their cars when they reached the 10-year mark and racked up more than 100,000 miles. These days, many makes and models can outlast those old benchmarks. That means your 10-year-old car may have retained significant residual value.
  • How much does full coverage cost? Take the cost of annual coverage and weigh it against your deductible and the value of your car. At a certain point, you may find there’s not much financial benefit to paying the additional costs of full coverage, and then it may be time to consider removing collision coverage from your policy.

If you have additional questions or want to talk this through, contact a local ERIE agent. They will be able to walk you through specific auto policy details and make sure yours is tailored specifically to you.

What Are the Benefits of Auto Collision Insurance Coverage?

Collision insurance can offer you more than just peace of mind. It can help pay for damage to your car if it’s involved in an accident.

If you have collision insurance, you can avoid having to pay out-of-pocket for damages to your vehicle that exceed the cost of your deductible. It can also help cover your losses with a totaled car.

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies.

We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Our research team considered market share, ratings from industry experts, and years in business when giving this score.
  • Availability: Auto insurance companies with greater state availability and few eligibility requirements scored the highest in this category.
  • Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
  • Cost: auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
  • Customer Experience: This score is based on the volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. Based on our own shopper analysis, we also considered the responsiveness, friendliness, and helpfulness of each insurance company’s customer service team.

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