Most states in the U.S. require all car owners to have some form of auto insurance to protect from the high costs associated with car accidents. Whether a minor dent or a serious injury, automobile accidents can cause significant financial burdens—without the proper insurance.
You’re driving on a local road, singing along to the radio, and you get into a car accident. If your car crashes—whether or not you are legally found at-fault—you will need to find a way to pay for replacements or repairs for your car.
Collision coverage helps pay for damages to your vehicle if you get into an accident that involves some sort of collision. While many car crashes fall under this policy, it’s important to know what your collision plan under your auto insurance would cover in the case of an accident.
So what does collision insurance cover that differs from other forms of auto insurance? And do you really need it? We take a deeper dive below!
What Does It Cover?
Collision insurance will cover repairs and replacements to your own vehicle if it crashes into another vehicle or stationary object while you are driving. This includes if you hit another vehicle or if another vehicle hits you, so collision coverage doesn’t rely on “at-fault” in order to pay out. It can also include hitting fixed objects like a bridge, tree, mailbox, sign, street lamp, and more. Collision coverage will occasionally cover hit and run costs, but it depends on the state’s at-fault policy.
Collision coverage pays for the costs of your own vehicle. If you are in a collision with another vehicle, the costs for the other driver’s repairs will either be paid for by their own insurance; or, if a lawsuit ensues and you are found at-fault, the costs would be paid through your property damage liability coverage.
The same is true in reverse; if your collision coverage isn’t enough to cover all of the costs of your damaged vehicle when another driver was found at-fault for the accident, you could sue them to make up the difference. They would then pay for this out of their property damage liability coverage, if they have it, or out of pocket.
Collision auto insurance covers those incidents where one or both motorists somehow had control over the collision. It does not include those incidents where an outside force acts upon the vehicle, like theft or a fallen tree branch, as those are covered under comprehensive insurance. Think of it this way: collision is a human’s fault; comprehensive is nature’s (or luck’s) fault. Collision and comprehensive are often packaged together by insurance companies into a plan called “physical damage coverage,” which covers all potential costs to pay for your personal vehicle’s repairs.
Is It Required?
Collision insurance is not presently mandatory by any state in the U.S. However, it is recommended in many cases in order to ensure you are not faced with overbearing financial costs after some sort of accident.
How Much Coverage Do You Need?
Collision coverage is not recommended for everyone. In order to determine if you need coverage and how much you would need, you need to look at two key factors: the overall usage of your car and the value of your car at time of insuring with depreciation.
How do you typically use your car? The more often you drive, the higher your risk of getting into an accident. People who drive often or large distances should consider getting collision coverage to protect against unexpected crashes.
However, the more you drive, the more your car will depreciate as well. This is where the value of the car takes precedence when determining coverage.
When you are looking into purchasing collision auto coverage, you should look at your car’s current and future value. Cars depreciate significantly over time, so the value of your car today is often much higher than the value in five years (unless you are driving a historical or classic car).
If you have an older or low-value car, it might not be worth paying for collision coverage. Your insurance company will only pay up to the estimated market value of the car at the time the claim is made. If you have a low value car, your premiums may end up being more expensive than what your insurance company will pay out for damages.
Collision coverage is recommended for newer, rare, or high-value cars, though. If a high-value car were totaled, the price to pay for replacement would be much heftier and burdensome. Collision coverage is also always recommended for those who have a leased or financed car.
How to figure out if you should pay for collision coverage:
How much will your car be worth in five years?
How much would your premium be for collision coverage?
If the value of the premiums for the next five years is greater than the predicted value of the car, it is not worth buying collision insurance. More often than not, though, your premiums will be less than the value of your car. Thus, it’s time to talk to an agent and do the math together.
Get a quote with InsuraMatch to see how much your premium would be for your collision insurance.
Collision Coverage Bottom Line
If there is a collision with another car or a stationary object while in a motorist’s control, collision coverage is the go-to insurance option to help cover expenses. While not required, it is highly recommended for those with vehicles that would cost a significant amount to be repaired or for those at a high risk based on usage of their car.
To help you see if collision coverage is worth it for you, talk to a licensed agent and compare up to 8 carrier quotes in only 10 minutes with InsuraMatch!