“Collision Insurance Explained: What You Need to Know”

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What Is Collision Insurance?

Collision insurance covers the cost of repairing or replacing your vehicle if it’s damaged in a collision with another vehicle or object. This type of insurance is typically included in a standard auto insurance policy, which also covers liability, medical payments, uninsured/underinsured motorist coverage, and comprehensive coverage. However, you can opt out of collision coverage to lower your insurance premiums.

What Does Collision Insurance Cover?

Collision insurance covers damage to your vehicle caused by:

• Colliding with another vehicle
• Colliding with an object, such as a tree, building, guard rail, or mailbox
• Hitting a pothole
• Flipping your car

What Doesn’t Collision Insurance Cover?

Collision insurance does not cover:

• Liability claims
• Medical expenses
• Vehicle theft
• Damage to another driver’s car
• Damage to your car when you aren’t driving
• Wear and tear on the car
• Mechanical breakdowns
• Aftermarket vehicle modifications

Is Collision Insurance Required by Law?

While states typically require drivers to carry liability insurance, collision insurance is not mandated by law. However, if you lease or finance a car, the leasing company or lender usually requires you to carry collision insurance until the lease ends or the loan is paid off.

How Much Collision Insurance Do I Need?

The amount of collision coverage you need is determined by your car’s value. To reduce your insurance premiums, you can choose a higher deductible, which is the amount you’ll pay out of pocket when you file a claim.

How Much Does Collision Insurance Cost?

According to the National Association of Insurance Commissioners (NAIC), the average annual cost of collision insurance is $370.73. However, costs can vary based on factors such as location, the type of car, coverage amount, driving record, and annual mileage.

Is Collision Insurance Worth It?

Deciding whether collision insurance is worth it depends on your individual circumstances. You may not need it if your car is older and not worth much, or if you can afford to repair or replace the car without an insurance payout. On the other hand, collision insurance can be a good investment if you would struggle to pay for car repairs or a new vehicle after an accident.

The Bottom Line

Choosing to go without collision insurance can save you money on premiums, but it also means you’ll be responsible for repair or replacement costs if your car is damaged in a collision. To save on car insurance, consider comparing quotes from multiple companies, shopping for insurance annually, looking for discounts, and raising your deductible. Maintaining good credit can also help lower your insurance costs.

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