What is collision insurance?

Key points

• Collision insurance can help pay for repairs to your vehicle if it collides with an object, such as another vehicle or pole.
• If you have a loan or lease on your car, your lender likely requires collision coverage.
• Collision and comprehensive car insurance offer coverage for different types of scenarios and are not interchangeable.

Collision insurance explained

Collision insurance is an optional car insurance coverage that pays to repair or replace your vehicle if it’s damaged in a crash with another car or object, regardless of who is at fault. It does not cover damage to another person’s vehicle after an accident you cause — you’ll need liability insurance for that. 

Collision insurance has a deductible, which is the amount your insurer will deduct from your claim check. If your collision insurance deductible is $500 and repairs to your car will cost $2,000, your insurer will pay $1,500.

As an optional coverage, collision insurance will increase the cost of your car insurance by an average of $814 per year. According to Mark Friedlander, spokesperson for the Insurance Information Institute (Triple-I), about 80% of drivers in the United States carry collision insurance.

What does collision insurance cover?

Collision insurance covers repairs or total replacement of your vehicle if:

• You collide with another vehicle.
• You crash into an object, like a tree or a fence.
• You hit a pothole while driving. 
• You’re the single driver in a crash like a rollover.
• You are the victim of a hit-and-run. 

What is not covered by collision insurance?

Collision insurance does not cover damage to:

• Another driver’s vehicle. 
• Medical payments for any individual injured in a collision. 
• Vehicle damage from a storm or natural disaster.
• Car theft or vandalism.
• Damage from falling objects, such as a broken tree limb. 
• Contact with an animal, such as hitting a deer.

If you want coverage for car theft and damage caused by falling objects, animal collisions, flood, fire and hail, you need comprehensive car insurance. This coverage is usually sold with collision insurance and both are typically required if you have a car loan or lease. 

How does collision insurance work?

Collision insurance pays to cover repairs or replacement of your vehicle up to its actual dollar value, minus your car insurance deductible. This coverage applies whether or not you are at fault for the collision.

If you’re considering adding collision coverage to your car insurance policy, figure out approximately how much your vehicle is worth so you can buy appropriate coverage.

How much does collision insurance cost?

Collision insurance costs an average of $814 per year, according to data from our study of rates. Here are average annual rates by car insurance company.

CAR INSURANCE COMPANY	AVERAGE ANNUAL COST OF COLLISION INSURANCE
Allstate	$1,372
American Family	$882
Auto-Owners	$610
Erie	$727
Farmers	$841
Geico	$742
Mercury	$799
Nationwide	$657
Progressive	$674
Safe Auto	$1,402
State Farm	$680
Travelers	$566
USAA	$638
Westfield	$808

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How much you’ll pay for collision insurance will depend on several factors, such as your:

• Address. 
• Age.
• Deductible. 
• Driving record.
• Value of car. 

Lower deductibles typically mean higher premiums, though if you want to save on your collision insurance, you can choose a higher deductible.

Collision coverage deductibles and limits

Collision insurance features some important terms that you should know if you’re shopping for a policy: deductibles and limits. These factors contribute to the formula that determines how much you’ll pay for your collision insurance policy, and how much the car insurance company will pay out if your car is damaged or totaled.

The deductible is the amount the insurance company will deduct from your claim check. Typically, the higher your deductible, the lower your premiums. 

If you have a $100 deductible, you’ll have higher premiums than if you have a $2,000 deductible, because the insurance company will have to pay more for the cost of the repairs and replacements if you file a claim. 

The limit of your collision policy is what your car is worth today, otherwise known as its value. This is the highest dollar amount your insurance company will compensate you for if your car is a total loss, meaning the repairs cost more than its value. 

Your vehicle’s value factors into how much you’ll pay for your policy, along with the deductible.

Why buy collision coverage?

So, you may be wondering, do I need collision insurance? When considering whether to add collision coverage to your car insurance policy, keep in mind that having it could provide peace of mind for a variety of scenarios in which your car can be seriously damaged or deemed a total loss.

Collision insurance pays for damage to your car if you collide with another vehicle or object (regardless of who is at fault), hit a pothole, your car rolls over or you’re the victim of a hit-and-run accident. 

If you’d be unable to pay out of pocket to repair or replace your car in any of those situations, consider purchasing collision coverage.

Collision insurance FAQs