What Is Collision Insurance And What Does It Cover?

What Is Collision Insurance And What Does It Cover?

Based on the most recent data available from the Bureau of Transportation Statistics, there were over 5.25 million car crashes in the United States that were reported to the police in 2020. It translates to about 14,000 auto accidents every day.

Even though that’s a lot of auto accidents, this year will probably see more of them. This is due to a 22% drop in automobile crashes that the police reported in 2020, which was mostly caused by less miles driven in the early phases of the epidemic. Police-reported crash data is probably going to trend back towards the 6.6 million annual average that was recorded between 2015 and 2019.

Then there are the incidents that go unreported, such as small collisions in supermarket parking lots and automobiles that unintentionally rear-end poles.

To sum up, automobile accidents occur frequently. You will also require collision insurance if you want your auto insurance to cover repairs or replacement in the event of an auto accident. Should you choose not to have this extra coverage type, you may have to pay hundreds of dollars out of pocket.

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What Is Collision Insurance?

After a collision, collision insurance covers the cost of replacing or repairing your vehicle, less your deductible. Collision insurance is usually an optional benefit, so adding it to your auto insurance policy will cost extra.

Your lender or leasing company will probably require collision insurance if you have a car loan or lease.

What Does Collision Insurance Cover?

Collision insurance covers car repair bills if your car is damaged in an accident or pays to replace your car if it’s totaled in an accident, such as:

• A car crash with another vehicle
• A car crash with an object, such as a fence, pole or guardrail
• Another car crashes into your vehicle, such as a hit and run
• Your car rolls over

What Collision Insurance Doesn’t Cover

Collision insurance does not cover:

• Damage to another person’s car
• Injuries
• Damage to your car related to weather, such as hail damage or flood damage
• Car theft
• Repairs to an object you crash into, such as a fence or pole

You must purchase comprehensive insurance if you want coverage for issues like auto theft, flood, fire, hail, falling objects (like tree branches), and collisions with animals. If you have a car loan or lease, comprehensive insurance is normally necessary and is sold alongside collision insurance.

How Does the Collision Insurance Deductible Work?

Claims for collision coverage are subject to your auto insurance deductible. The amount subtracted from an insurance claim cheque is known as the insurance deductible. For instance, if your car repair bills total $3,000 following an accident and you have a $500 deductible, you will receive a $2,500 insurance check ($3,000 – $500 = $2,500).

The amount of your deductible will be up to you to decide when you get collision insurance. Deductible amounts are allowed to be as high as $1,000, however $500 is a pretty typical number. In most cases, you can save money on auto insurance rates by selecting a greater deductible. This is due to the fact that if you submit a collision insurance claim, your insurer will pay less.

Do You Need Collision Insurance?

Collision insurance is an optional coverage that you can choose not to purchase if you own your vehicle. It is likely mandatory for you to purchase collision insurance if you have a car loan or lease. This is so that, in the event that your car is totalled in an accident, your lender or leasing company can safeguard their financial investment.

Collision insurance is not necessary, but it’s still something to think about. The latest NAIC statistics shows that the average collision claim nationwide was $4,601. In the event that you caused an automobile accident and lacked collision coverage, your auto repair expenses would be uninsured. And should your vehicle be declared completely lost, you would have to pay out of pocket to replace it.

What If Another Driver Crashes Into My Car?

You have two options in the event that someone crashes into your car:

File a claim with your personal collision policy.

Your deductible will be deducted from the amount your collision insurance pays for auto repairs. If your deductible is $500 and your auto repair costs total $3,000, you will receive a $2,500 insurance check.

Through a procedure called “subrogation,” your insurance company may be able to recover all or part of your deductible if the other motorist caused the collision. The laws governing this process differ from state to state, and the resolution process may take up to a year or more.

Submit a claim under the other driver’s liability policy.

You may file a claim against the other driver’s liability insurance if you believe they are at fault for the collision. Dealing with the other driver’s insurance provider will be your responsibility. Depending on the state in which you live, this process may get somewhat complex. This is so that each motorist is given a set percentage of the blame in auto accidents under comparative negligence regulations that are in place in some states.

For instance, the insurance company of the other driver may determine that you are 25% at fault and their driver is 75% at fault for the collision. The other driver’s insurance provider may only cover 75% of your claim in this case. If the cost of fixing your car was $3,000, you would receive an insurance check for $2,250 ($3,000 x 75% = $2,250) before your deductible is subtracted. The details of how fault is split up vary by state.

Quick Facts on Collision Insurance

• Collision insurance can be bought only in conjunction with liability and comprehensive coverage.
• Collision insurance repairs damage when two vehicles in drive or reverse collide with each other.
• Collision insurance will cover damage to your vehicle if you hit ice and slide into an inanimate object.
• Collision covers pothole damage.
• Collision coverage can be expensive, but people can save on premiums by choosing a $500 or higher deductible.

Comprehensive vs. Collision Insurance

What the driver controls is the primary distinction between comprehensive and collision coverage. When a motorist is at fault or when their vehicle collides with another, their collision insurance will pay for it. Generally speaking, “acts of God or nature,” or situations that are normally beyond your control when driving, come under the category of comprehensive coverage. These may be things like a carjacking, a strong hailstorm, or a frightened deer.

Let’s demonstrate the distinctions between collision and comprehensive insurance using the aftermath of a significant storm. Within that tempest, let us contemplate two speculative scenarios: One of two things happened to your truck: either a large telephone pole was blown over and fell on it, or you swerved to escape a tree that was falling and ended up running into a guardrail. In the first event, you couldn’t control when or why a tree fell on your car.

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