What Is Collision Insurance?
If your vehicle is damaged in an accident, whether it’s your fault or not, collision insurance is an optional coverage that helps pay the cost of repairing or replacing it. Usually, when you get in a covered accident, you’ll pay a deductible before the insurance kicks in, which is a set amount of money you choose when you build your policy. Collisions involve anything from hitting another vehicle, to hitting an object, like a tree, guardrail or mailbox.
What Does Collision Insurance Cover?
Basically, collision insurance protects your vehicle from collisions with other vehicles by helping pay for damages, including if your vehicle is totaled.
If you get T-boned, rear-ended or side-swiped, or you do the same to someone else’s vehicle, collision coverage acts as an invisible shield to protect you financially. Or, let’s say you didn’t see that really gigantic tree behind you and you backed right into it. Collision coverage will help pay for the resulting gigantic dent.
You’ll also be covered from damages caused in accidents where no other car or object is involved. For example, a rollover caused by black ice.
Is Collision Insurance Required?
No state actually requires you to carry collision insurance, but if you have a loan on your car or if you lease it, your lender will typically require you to have collision coverage. However, if you own your car outright, collision coverage is optional.
If you do own your vehicle and decide to forgo collision insurance, keep in mind, this coverage helps you avoid paying out-of-pocket for repairs that end up costing more than your deductible, and if your vehicle is completely totaled, you’d be covered for your loss. This could save you a lot of money and stress. You’ll feel more secure on the road knowing you’re protecting a dream you worked hard to make your own.
What Does Collision Insurance Not Cover?
Though collision insurance protects you in many ways, there are some instances where it doesn’t cover your vehicle — don’t worry, in these cases, you can be covered under other additional coverages, which we conveniently list below.
Comprehensive coverage. Usually, collision insurance won’t cover damages to your vehicle that occur when it’s not being driven. Think storm damage, hail, falling objects, even theft and vandalism. This is where you’ll want to consider comprehensive coverage. Most lenders, whether you have a car loan or are leasing, will require you to have both collision and comprehensive coverage, which is why they are almost always sold together. Just think of these coverages as an invisible shield completely protecting your vehicle in case the unexpected happens.
Bodily injury liability coverage. Collision coverage also doesn’t cover expenses related to bodily injury. For instance, if you cause a crash and injure someone in another vehicle, you’ll usually be covered with the bodily injury liability coverage of your auto insurance policy, and it may help pay for their medical bills.
Medical expense coverage. Generally, medical expense coverage, may help pay for medical costs incurred from an auto accident. It can help cover medical expenses for you, your passengers and family members who may have been driving the vehicle at the time of the accident. It also may help cover you in the event you or a family member is injured in another car or injured as a pedestrian. Remember, medical payments coverage actually extends to your passengers, where your health insurance does not.
Uninsured and underinsured motorist coverage. These separate but similar coverages help you out in the event you’re hit by a driver who has no insurance or has some insurance, but not enough to cover the cost of the damages. Also, if you’re in a hit and run, these coverages have your back. If you don’t have uninsured or underinsured motorist coverage, you could be dealing with a big headache and having to pay out of pocket for any damages done to your vehicle.
You can check out our auto insurance comparison guide to help you understand how customizing your auto insurance policy with the right coverages can protect you mile after mile.
When Do You Use a Collision Insurance Deductible?
If your car is damaged in a collision, your collision deductible is the specified amount of money that you, the insurer, must pay out-of-pocket before your insurance company steps in to help pay for the claim.
For instance, let’s say you get into an accident caused by another driver, resulting in damages over $5,000. You and your insurance agent already agreed upon a set amount of money for your deductible when building your policy, so it’s no surprise that you’ll be paying some money for damages — even if the accident wasn’t your fault. If your deductible is $1,000, you’ll pay $1,000 towards the damages, and American Family will pay the remaining $4,000.
How high your collision insurance deductible is set is up to you, but keep in mind, the lower the deductible, the higher your monthly premium. And vice versa — the higher the deductible, the lower your monthly premium will be.
Collision coverage is just one more way for you to gain peace of mind on the road. Talk with your American Family Insurance agent to find out how you can customize your auto insurance coverage to keep you driving safe, happy and protected.