What Collision Insurance Covers and How It Works

Collision insurance pays to fix or replace your car if you hit another vehicle, a stationary object, or flip over — regardless of who caused the accident

Collision coverage is one part of your auto insurance policy that handles damage your car takes in a crash. It covers repairs (or the car's cash value if it's totaled) when you collide with another car, a telephone pole, a guardrail, a ditch, or the pavement itself. It does not cover theft, weather, vandalism, or hitting an animal — those fall under a separate coverage called comprehensive.

The key word is collision. If your car moves and hits something, or something moving hits your car, collision is what pays. If your parked car gets hit by another vehicle and the other driver's insurance covers it, your collision coverage stays in the background. If you cause the accident, your collision coverage still pays for your repairs, though your rates may go up.

Key Takeaways

• Collision insurance pays for damage when your car hits something or flips, but only if you choose to buy it — it is not required in most states.
• You pick a deductible (usually $500 or $1,000), and you pay that amount out of pocket before insurance covers the rest.
• Collision does not cover theft, weather, animal strikes, or vandalism — those are covered by comprehensive insurance instead.
• If your car is financed or leased, your lender or leasing company will require you to carry collision coverage.

How collision insurance works after an accident

When you have a collision claim, you report the accident to your insurance company and provide details about what happened. The insurer sends an adjuster to inspect the damage, or you can take photos and submit them online depending on the damage amount and your insurer's process.

The adjuster estimates the cost to repair your car. If the repair cost is less than the car's current cash value, the insurer pays for repairs minus your deductible. You pay the deductible to the repair shop, and insurance covers the rest. If the repair cost exceeds the car's value (usually around 70 to 80 percent of value, though this varies by state and insurer), the car is declared a total loss. The insurer pays you the car's cash value minus your deductible, and you keep the vehicle's title.

You can choose where to have your car repaired — you are not required to use the insurer's preferred shop. Some insurers offer a network of shops with may provide work, but you have the right to take your car elsewhere.

Deductibles and how they affect your premium

A deductible is the amount you agree to pay toward repairs before insurance kicks in. Common deductibles are $500 and $1,000, though some insurers offer $250 or $2,500 options. The higher your deductible, the lower your monthly or annual premium. The lower your deductible, the higher your premium.

Choosing a deductible means balancing what you can afford to pay out of pocket against what you want to pay in premiums. If you have $1,000 in savings and can handle that hit if an accident happens, a $1,000 deductible will lower your premium. If you have less savings or want to minimize out-of-pocket costs, a $500 deductible costs more per month but means you pay less if you crash.

Your deductible applies to each collision claim. If you have two separate accidents in one year, you pay the deductible twice — once for each claim.

When collision insurance is required

Collision insurance is optional in most states if you own your car outright. However, if you finance a car through a loan or lease it, your lender or leasing company will require you to carry collision coverage as a condition of the loan or lease agreement. They do this because they have a financial stake in the vehicle — if you total it, they want to know insurance will cover the loss.

Some states have different rules. A few states require collision coverage for newer vehicles or vehicles with outstanding loans, but the requirement comes from your lender, not the state. Check your loan or lease paperwork to see what coverage your lender requires.

Collision versus comprehensive: what each covers

Collision and comprehensive are often sold together but cover different types of damage. Collision covers crashes — you hit something or something hits you. Comprehensive covers everything else: theft, vandalism, weather (hail, flooding, wind), animal strikes, falling objects, and fire.

If a tree falls on your parked car, that is comprehensive. If you swerve to avoid a deer and hit a tree, that is collision. If your car is stolen, that is comprehensive. If you crash into a guardrail while driving, that is collision. Both have separate deductibles, so you might choose a $500 collision deductible and a $1,000 comprehensive deductible, or any combination.

What collision insurance does not cover

Collision does not pay for damage from weather, theft, vandalism, or hitting an animal. It also does not cover mechanical breakdown, wear and tear, or damage from normal use. If your engine fails or your transmission breaks down, that is a maintenance issue, not a collision claim.

Collision also does not cover injuries to you or passengers — that is covered by liability and medical payments coverage. It does not cover damage to other people's property or injuries to other people in an accident you cause — that is liability coverage. Collision is strictly about fixing or replacing your own vehicle after a crash.

How to decide if you need collision coverage

If your car is financed or leased, your lender requires it, so the decision is made for you. If you own your car outright, the choice depends on the car's value, your financial situation, and your comfort with risk.

A general guideline: if your car is worth less than 10 times your deductible, the premium you pay for collision may not be worth it. For example, if your car is worth $5,000 and collision costs $400 per year with a $1,000 deductible, you are paying $400 annually to protect $4,000 in value (after deductible). Over time, that math may not work in your favor, especially as the car ages and its value drops.

However, if you cannot afford to replace or repair your car out of pocket, collision coverage protects you from that financial hit. If you have an accident and no collision coverage, you pay for all repairs yourself. That could mean a $10,000 repair bill or a total loss you cannot recover from.

Frequently Asked Questions

Does collision insurance cover hitting a pothole or curb?

Yes, if the impact causes damage to your car. Hitting a pothole and damaging your suspension or wheel is a collision claim. However, if you just hit a pothole and nothing breaks, there is no damage to claim. Collision covers the damage from the impact, not the impact itself.

What happens to my rates after a collision claim?

Most insurers raise your rates after you file a collision claim, even if you were not at fault. The increase varies by insurer and state, but you can expect your premium to go up for three to five years. Some insurers offer accident forgiveness programs that waive the rate increase for your first accident if you have been a customer for a certain period.

Can I use collision insurance if the other driver has no insurance?

Yes. If you are hit by an uninsured driver, your collision coverage pays for your repairs minus your deductible. You can also file a claim under uninsured motorist coverage if you have it, which may cover injuries or additional damages. Collision is your safety net when the other driver cannot pay.

What if my car is worth less than the repair cost?

If the repair cost exceeds the car's value (the threshold varies by state and insurer, typically 70 to 80 percent), the insurer declares it a total loss. You receive the car's cash value minus your deductible. You keep the title and the vehicle, though the title will be marked as salvage in most states.

Does collision cover rental cars?

Your personal collision policy typically does not cover rental cars. However, many credit cards offer rental car coverage, and rental companies sell collision coverage at the counter. Check your credit card benefits and ask the rental company what options they offer before you rent.