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Collision Insurance: Do You Need It?

Collision insurance pays to repair or replace your car after a collision-related car accident, even if you are the at-fault driver. Covered losses include striking another vehicle, a pedestrian or a stationary object plus single-car rollovers. Collision coverage is required if you have an outstanding auto loan and will cost $381.43 per year, on average, according to the National Association of Insurance Commissioners.

Keep reading to learn how collision insurance works.

What Does Collision Insurance Cover?

Collision insurance covers your car if it is damaged or suffers a total loss after physically striking another car or object. Examples of collision coverage claims include:

  • Auto accidents with other vehicles (e.g., cars, trucks, motorcycles or RVs)
  • Collisions with stationary objects (e.g., guardrails, telephone poles, posts, guardrails, garages, mailboxes, houses)
  • Single-vehicle overturns
  • Striking an animal on the road
  • Pets injured while inside your car (coverage varies by company)

Collision insurance is available for multiple types of vehicles, including cars, motorcycles, boats and RVs.

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What Isn’t Covered by Collision Insurance?

Collision will not cover you for non-collision-related physical losses, such as theft, vandalism and medical bills but there are other types of coverage you can buy for these costs. Losses not covered under collision insurance include:

  • Other people’s losses when you’re liable
  • Medical expenses
  • Vandalism
  • Theft
  • Floods
  • Fire
  • Weather and some natural disasters
  • Falling or flying objects
  • Hail

Collision coverage is required if you have an outstanding auto loan and will cost $381.43 per year, on average.

How Do Deductibles Work With Collision Insurance?

Collision coverage claims are subject to a deductible, the amount you must pay out-of-pocket before your insurance company covers the remaining balance, up to your policy limits. Deductibles range from zero dollars to $2,000 with most drivers choosing a $500 deductible, on average, according to American Family Insurance.

Example: After a covered collision, your car repair bill totals $1,200 and you have a $500 deductible. After you pay the $500 deductible, your auto insurance company will cover the remaining $700.

Your deductible amount can affect your monthly premium because you will be shouldering more of the costs after a covered car accident with a higher deductible and less with a lower deductible. Therefore, a higher deductible can result in a lower monthly premium. Conversely, a lower deductible can increase your monthly premium because you are transferring that financial responsibility to the insurance company.

If you’re a safe driver with a clean driving record, consider choosing a higher deductible. You only pay a deductible if you get into a car accident and safe driving habits will pay off over time with lower premiums.

How Collision Insurance Works When the Other Driver Is at Fault

The way collision coverage works when the other driver is responsible for a car accident depends on whether or the other driver has liability insurance and high enough limits on that coverage.

When They Have Liability Insurance

You can file a liability claim with the at-fault driver’s insurance company instead of filing a collision claim with your own company. Getting the other driver’s insurance company to cover your losses is preferable because you do not pay a deductible. However, you should first notify your insurance company about the accident and provide them the following information:

  • Other driver’s insurance information
  • Pictures of your damages, injuries and the scene of the accident
  • Copy of the policy report (if applicable)
  • Names and contact information of witnesses

Your insurance company will instruct you on next steps. You can speak directly with the other driver’s insurance adjuster but you don’t have to. Most experts recommend you avoid speaking with the other insurance company and let your insurance company represent your interests.

When They Don’t Have Liability Insurance

If the other driver does not have liability insurance or too little of it, you can file a collision coverage claim with your auto insurer to get reimbursed for property damages that were not covered. However, collision coverage will not pay for your medical expenses if you or your passengers sustained injuries. This is covered under your health insurance, medical payments (Medpay) coverage on your car insurance or personal injury protection (PIP), depending on your state.

Uninsured/underinsured motorist (UM/UIM) coverage may apply if the other driver does not carry auto insurance or has too little of it. UM/UIM coverage will cover both your property damages and medical expenses if you or your passengers are injured. Deductibles may apply for property damage claims but not for bodily injury claims.

If you already have collision coverage and Medpay/PIP, UM/UIM insurance may be unnecessary (unless required in your state).

Hit-and-Runs

Collision coverage in hit-and-run scenarios would apply similarly to when the driver does not have liability insurance.

If the other driver flees the scene after hitting your car while being driven or parked, collision coverage should cover your car’s physical damages. Since collision coverage pays for your losses, regardless of who is at fault, you will not need to track down the driver who hit you. Bodily injuries would be covered under Medpay/PIP coverage, if you have it.

Depending on the insurer, UM/UIM coverage may pay for your physical damages and injuries, as well.

How Much Does Collision Coverage Cost?

The average annual cost of adding collision coverage to your auto insurance policy is $381.43, according to the National Association of Insurance Commissioners. Actual costs can vary by company, region, your vehicle and other factors. Also, collision and comprehensive insurance are often purchased together (called full coverage), which will add to the cost of car insurance.

Collision insurance covers your car if it is damaged or suffers a total loss after physically striking another car or object.

Use our table to find the average annual cost of collision insurance coverage in your state.

State

Average Annual Premium

Alabama

$390.19

Alaska

$401.87

Arizona

$327.86

Arkansas

$372.65

California

$495.18

Colorado

$332.26

Connecticut

$412.78

Delaware

$354.76

District of Columbia

$539.48

Florida

$355.69

Georgia

$420.60

Hawaii

$370.53

Idaho

$270.36

Illinois

$351.27

Indiana

$288.97

Iowa

$250.96

Kansas

$285.92

Kentucky

$307.91

Louisiana

$485.01

Maine

$297.60

Maryland

$430.21

Massachusetts

$447.05

Michigan

$478.54

Minnesota

$274.20

Mississippi

$364.63

Missouri

$318.44

Montana

$286.02

Nebraska

$272.97

Nevada

$374.59

New Hampshire

$334.29

New Jersey

$422.29

New Mexico

$315.88

New York

$469.82

North Carolina

$344.07

North Dakota

$284.09

Ohio

$303.55

Oklahoma

$338.87

Oregon

$281.69

Pennsylvania

$383.01

Rhode Island

$491.19

South Carolina

$317.95

South Dakota

$248.09

Tennessee

$353.43

Texas

$434.46

Utah

$308.40

Vermont

$338.38

Virginia

$323.76

Washington

$325.38

West Virginia

$352.97

Wisconsin

$250.73

Wyoming

$292.37

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Who Needs Collision Insurance?

Collision insurance coverage is not required by law but may be necessary if you have a car loan. Even if your car is fully paid, collision coverage may still be useful if your car has a high fair market value or you’re unable to pay for repairs out-of-pocket.

Collision will not cover you for non-collision-related physical losses, such as theft, vandalism and medical bills.

You Have an Outstanding Car Loan

If you’re financing or leasing your car, then your lender will likely require you to maintain collision coverage until you fully repay the loan. If you fully paid for the car out-of-pocket or you repaid your loan, then collision coverage is optional.

Your Car Has a High Fair Market Value

If your car is brand new or still worth a lot after several years, maintaining collision coverage may be worth the cost. Collision coverage will pay for costly repairs or may pay you up to your policy’s maximum limits if it is totaled in a car accident.

You’re Unable to Pay Repair Costs Out-Of-Pocket

Car repairs can be costly, and if you’re unable to pay for repairs out-of-pocket, collision car insurance can offer some financial relief. Unless you have an adequate savings account for emergencies, you should consider purchasing collision insurance to repair your car back to drivable condition post-accident.

FAQs

Should you get collision insurance on older cars?

The value of collision insurance on an older car depends on its fair market value. If your car’s old age and high mileage places it a few hundred dollars above the annual cost of collision coverage plus your deductible, then collision insurance may not be worth the added cost.

Is collision insurance required?

If you finance your car purchase, then your lender will require you to maintain collision and comprehensive coverage until you fully repay the car loan. After the loan is repaid, you can choose to drop collision coverage.

When can you drop collision insurance?

You can drop collision insurance if you do not have an outstanding auto loan. However, collision coverage may be worth maintaining if your vehicle has a high fair market value and is costly to repair.

What's the difference between collision and full coverage?

Collision coverage is one of two types of auto insurance that make up full coverage. The second type of coverage is comprehensive insurance, which covers non-collision losses, like theft, vandalism and damage from hail and more.

What is the difference between comprehensive and collision coverage?

Collision insurance covers losses when your car strikes another car, physical object or experiences a rollover. Comprehensive coverage pays for non-collision losses, such as theft, vandalism and hail damage.

Key Takeaways

  • Collision insurance pays to repair or replace your car if it’s involved in a collision with another driver or object, even if you are the at-fault driver.
  • No state or federal law mandates that drivers maintain collision coverage but auto lenders may require it as a condition for approving an auto loan.
  • The national average annual cost to add collision coverage to your auto policy is $381.43 according to the National Association of Insurance Commissioners.
  • Collision coverage is subject to a deductible, which typically ranges from zero dollars up to $2,000.

Find the cheapest options for adding collision coverage to your auto policy. You’ll need collision car insurance if you have an auto loan, and SmartFinancial’s FREE online tools can help you find the lowest price on a new policy. Just enter your zip code below or call 855.214.2291 to receive your free auto insurance quotes now.

Methodology

SmartFinancial obtained average premium rates for collision coverage by state and nationwide from a 2022 report by the National Association of Insurance Commissioners (NAIC): 2018/2019 Auto Insurance Database Report. NAIC calculated premiums using policies underwritten in 2019.

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