What is Collision Insurance Coverage? Is it required?
Collision insurance is insurance coverage that reimburses the insured driver for the damage sustained to the personal vehicle when the collision with another vehicle or object occurs due to the fault of the insured driver. Usually, collision insurance is added as an extension of the basic car insurance policy.
No matter how good of a driver you are, a simple distraction, poor driving conditions, or any other traffic may cause your car to collide with another car or a stationary object like a fence or tree. The cost of repair or replacement is often measured in hundreds if not thousands of dollars.
Let’s examine collision coverage in greater detail, shall we?
What does Collision insurance cover?
A collision can be best described as the instance when a vehicle collides with another vehicle, animal, pedestrian, or buildings, poles, a tree, etc. As we can see, all the situations we have described are frequent and they happen nationwide.
Looking at the sheer numbers, as many as 54 million people have sustained injuries from traffic collisions in 2013. The number of accidents that haven’t resulted in injuries is far higher.
The option to buy collision coverage that will be able to address these unfortunate but nevertheless common situations is something you should definitely take into consideration.
We have to point out one crucial thing, though:
As you can see above, the legal definition of collision is pretty broad. Events sometimes occur as a mistake of several parties. Sometimes, another car will hit yours when you are outside the vehicle. All these gray areas make the topic a bit muddled.
Therefore, we will provide you with a comprehensive breakdown of all practical scenarios in which you can claim insurance after a car accident. Also, we will point out to all situations that are not addressed by this specific type of insurance coverage.
Collision Insurance Covers:
- A crash with the other moving vehicle – In this case, the auto insurance reimburses the insured driver for the damage sustained to a personal vehicle due to the mistake of the insured driver. In other words, you get the coverage only for your car, and if the accident is your fault.
- A car collision with a stationary object – These objects are usually fences, lampposts, a tree, etc. However, we have to point out that collision insurance also covers the damage to your car that occurs after hitting a pothole or sliding into an object due to ice.
- Rolling over and falling over – Neither of these situations involves the direct collision with another object. Still, rolling over or falling from the height are listed under collision auto coverage.
Collision Insurance Does Not Cover:
- Damage to the vehicle when you are not driving – We are, for instance, referring to the situation when some object like a branch falls to your car while it’s parked in the driveway. This type of damage is reimbursed by a different kind of auto insurance.
- Damage to another vehicle – In the event of a collision with another moving vehicle, collision insurance will compensate repair cost only for your car, not the other driver’s.
- Theft – If the vehicle ends up stolen, the only way to get reimbursed for the value of your car is through other related types of insurance. We’ll talk about this topic in a moment.
- Wear and tear – The other cases when you won’t get the money from an auto insurance company are mechanical failures and roadside assistance.
- Medical expenses – Collision insurance covers only your vehicle. Liability and medical expenses are left out of the policy.
As we can see, collision insurance is an added value coverage people should definitely consider or get before they roll out their vehicle to the road.
Whether we are talking about an ordinary slip of attention resulting in an at-fault accident or the vehicle ends up damaged by some road hazard, the insured will be adequately compensated by the auto insurance company.
Collision Deductibles and Limits
Much like any other related car insurance policy, collision insurance also knows the concept of deductibles. If you are unfamiliar with this term, an insurance deductible is the amount of money you pay as an insurance claim before the coverage comes into play, and the insurance company starts paying for the damage to your vehicle.
In other words, collision insurance coverage pays to repair your covered vehicle in the event you are in an at-fault accident minus your collision deductible. Depending on the car insurance company, collision deductibles can typically range from $0 up to $2500.
For instance, if you choose a $1000 deductible and your vehicle ends up damaged in a collision accident, you will be asked to pay $1000 out of pocket towards the repair cost and damages.
Why do the prices of collision coverage and deductibles vary so much?
The reason is real simple – if the insureds buy the lower collision coverage deductible, the premium will most likely increase. Likewise, higher deductibles result in lower premiums and less money.
Which one of these options is better?
Finding the answer to this question is really hard. In most cases, you will choose the collision coverage deductible based on the value of your car. If you own an expensive automobile, agreeing to pay a higher deductible to lower the insurance premium may not seem like a prudent approach.
Of course, we have to point out that collision coverage also has a limit – the maximum amount the auto insurance policy will pay to the insured in the case of a collision accident. This limit is usually equivalent to the actual cash value of the vehicle minus the deductible.
Therefore, if the car gets totaled in the accident and the repairs are no longer possible, the insurer will be compensated with collision coverage equal to the car’s depreciated value minus deductibles. The full price of the totaled vehicle can’t be compensated.
How Much Does Collision Insurance Cost?
So, when all is said and done, how much does collision insurance actually cost? Well, if we take a look at the stats published by Insurance Information Institute, we can see that you are able to cover damage to your vehicle for the average annual price of $342.40. But all companies from State Farm, Liberty Mutual, Allstate, Famers, Nationwide, and Safeco will all have a different cost.
This number, however, can vary depending on a number of different factors. Here are the most common mentions:
- How often do you drive and your driving history – High driving frequency, as well as a history of traffic violations, will most likely bump the price you have to pay.
- Car comp, model, and age – Newer vehicles with safety features are less likely to cause collision accidents.
- Your state, location and zip – Insurance costs vary from zip code to zip code. and from state to state. For instance, the same insurance that costs $219.21 in South Dacota may go as high as $400 in the state of Texas.
- The number of vehicles – Typically, insuring more than one vehicle at a time opens up the way for lucrative discounts.
- The amount of deductible – As we previously mentioned, higher deductibles result in lower premiums as well as more out-of-pocket costs to repair your property.
Even so, we have to keep in mind that with the exception of state-by-state differences, the final price you are asked to pay sticks very close to the national average. For instance, insuring brand new Jeep Cherokee in the state of Kentucky will cost you $352.60 with a deductible of $1000.
Difference Between Comprehensive and Collision Insurance
This is yet another important topic we would like to discuss since the collision and comprehensive coverage often end up confused. But before we answer the question of what is comprehensive insurance and what are the differences between these two auto insurance policies are, let us quickly go back to the situations left out of the collision coverage.
The best way to describe comprehensive insurance is the insurance policy that is able to cover all the situations left out by the traditional collision coverage.
However, although the name suggests otherwise, collision and comprehensive insurance do not cross over. Even if your vehicle is comprehensively insured, the agreement does not cover the following instances:
- Damage to your car from a collision
- Damage to another owner’s car from a collision
- Passengers medical expenses after the accident
So, should you buy collision insurance or go with comprehensive coverage?
Ideally, both of them. The two policies don’t directly overlap each other. So, if you want to be ready for any critical situation, checking as many boxes as possible sounds like a sensible move.
Such a decision makes even more sense when we take into consideration that the comprehensive premiums are usually far however than the collision coverage premiums.
Reach Out to Us for More Information
We hope this short overview gave you some general idea about collision insurance and cleared up some things about the situations in which you can cover damage to your vehicle.
If you are on board with this type of coverage, take a look at some of the top insurance carriers in the industry. As an independent broker, it is in our best interest to help the right customers find the best possible collision insurance for their vehicles.