What Does Collision Insurance Cover?

Collision insurance is a critical component of auto insurance that provides financial protection in the event of an accident. Understanding what collision insurance covers can help you make informed decisions about your insurance needs and ensure you’re adequately protected. This article will detail what collision insurance covers, its benefits, and how it differs from other types of auto insurance.

What is Collision Insurance?

Collision insurance covers the cost of repairing or replacing your vehicle if it’s damaged in an accident, regardless of who is at fault. This coverage is especially important for protecting your investment in your vehicle, ensuring that you can repair or replace it without incurring significant out-of-pocket expenses.

What Does Collision Insurance Cover?

1. Accidents with Other Vehicles

Collision insurance covers damages to your vehicle resulting from a collision with another vehicle. Whether you’re at fault or the other driver is, collision coverage will help pay for the repair costs.

2. Single-Car Accidents

If you hit an object, such as a tree, fence, or guardrail, collision insurance will cover the damage to your vehicle. This is crucial for incidents where no other vehicles are involved.

3. Rollovers

In the event your vehicle rolls over, collision insurance will cover the damage. This type of accident can result in significant damage, and having collision coverage ensures you won’t have to bear the full financial burden.

4. Hit-and-Run Accidents

If your car is damaged in a hit-and-run accident, collision insurance will cover the repairs. This provides peace of mind knowing that you are protected even if the responsible party is not identified.

What Collision Insurance Does Not Cover

1. Damage Not Resulting from a Collision

Collision insurance does not cover damages from incidents other than collisions, such as theft, vandalism, or natural disasters. These types of damages are typically covered by comprehensive insurance.

2. Medical Expenses

Collision insurance does not cover medical expenses for you or your passengers. For medical costs, you would need personal injury protection (PIP) or medical payments coverage.

3. Liability for Other Vehicles

Collision insurance does not cover damage you cause to other vehicles. For that, you would need liability insurance, which is typically required by law.

4. Mechanical Breakdown

Damage due to mechanical failures or regular wear and tear is not covered under collision insurance.

Deductibles and Limits

When you purchase collision insurance, you will select a deductible amount. The deductible is the amount you pay out of pocket before your insurance covers the remaining costs. Common deductible amounts range from $250 to $1,000. Choosing a higher deductible can lower your insurance premiums but means you’ll pay more out of pocket in the event of a claim.

The coverage limit for collision insurance is usually the actual cash value (ACV) of your vehicle, which is the market value minus depreciation.

Benefits of Collision Insurance

1. Financial Protection

Collision insurance provides financial protection against costly repairs or total loss of your vehicle following an accident.

2. Peace of Mind

Knowing that you have coverage for various types of accidents can provide peace of mind while driving.

3. Required for Leased or Financed Vehicles

If you lease or finance your vehicle, your lender will likely require you to have collision insurance to protect their investment.

Collision vs. Comprehensive Insurance

Collision Insurance

• Covers damage from collisions with other vehicles or objects.
• Does not cover non-collision-related incidents.

Comprehensive Insurance

• Covers non-collision-related incidents like theft, vandalism, natural disasters, and hitting an animal.
• Does not cover collision-related damages.

For complete protection, many drivers opt for both collision and comprehensive insurance.

Collision insurance is an essential part of your auto insurance policy that covers the cost of repairing or replacing your vehicle after an accident. While it doesn’t cover everything, it provides crucial financial protection and peace of mind. Understanding what collision insurance covers and how it works can help you make the best decisions for your insurance needs and ensure you’re adequately protected on the road.