Is auto collision coverage required?
Car insurance collision coverage isn't legally required in any state, but your finance company may require it to protect their investment if your car is leased or financed. If you've paid off your vehicle and own it outright, you're never required to carry collision coverage on your auto insurance policy.
What does auto collision insurance cover?
Auto collision coverage can pay for damage caused by multi- and single-vehicle accidents, including:
- Collision with another car: If you're in a car accident, collision insurance coverage can cover the cost to repair your vehicle. If your vehicle is totaled, it can pay up to the actual cash value of your vehicle. Auto collision coverage applies regardless of whether you're at fault or not.
- Collision with an object: An accident with an object other than a vehicle can also be covered. Suppose you back into a fence post and damage the back of your vehicle. In that case, collision coverage may pay to repair or replace your vehicle.
- Single-vehicle accident: If you're in a single-vehicle accident, the damage may be covered. An example of this is accidentally hitting a street sign or utility pole.
- Accident with an uninsured driver: If your vehicle gets hit and the other driver is considered at fault, their property damage liability coverage should pay for the damage to your vehicle. However, if the at-fault driver is uninsured or underinsured, your collision or uninsured motorist property damage coverage can pay for all or part of the damage instead, minus your auto insurance deductible.
What's not covered?
Car insurance collision coverage doesn't apply to:
- Damage to your vehicle unrelated to driving, such as hail, flood damage, theft, or vandalism, which are covered under comprehensive coverage
- Animal strikes, such as hitting a deer — this is covered by comprehensive coverage as well
- Damage you cause to another driver's vehicle, which is covered under your liability coverage
- Medical bills, which medical payments coverage or personal injury protection may cover
How does auto collision coverage work?
If you're in an accident that causes damage to your vehicle, you can use your car insurance collision coverage to pay for the damage by following the steps below:
- File a claim: First, you file an auto insurance claim with your insurer. In most cases, you can file online, via a mobile app, or over the phone. Your insurer will detail their process, which will likely involve some paperwork, as well as submitting photos and video of the damage to support your claim.
- Pay your deductible: Collision coverage includes a deductible which your insurer will typically subtract from your claim payout. Deductible amounts can range from $100 to $2,000, depending on the insurer.
- Vehicle gets repaired: Your car gets fixed, with your insurer covering the cost of repairs, minus your deductible. Some insurers have preferred garages they work with that can offer guarantees on their repairs, but otherwise you can typically choose the repair shop you take your vehicle to. If your vehicle is totaled, you'll receive a claim payout for the actual cash value of your car, minus your deductible.
Is auto collision coverage worth it?
Aside from your home, your vehicle may be one of your biggest assets. It can cost thousands of dollars to repair a car after an accident, and without auto collision coverage, you may have to pay for the cost out of pocket. If you're not leasing or financing your vehicle, consider these factors when deciding whether to carry collision coverage on your car insurance policy:
- The value of your vehicle: If the actual cash value of your car is low, it may not be necessary to carry collision coverage. This is particularly true if you have a large deductible. Suppose your car is worth $2,000 and your deductible is $1,500. The most your insurer will pay out on a collision claim is $500. When your vehicle gets to the point where you would replace it instead of repairing it after an accident, collision coverage may not be worthwhile.
- Your vehicle is in storage: If your car is in long-term storage, collision coverage may not be necessary since it's unlikely to collide with something. However, you may want to keep comprehensive coverage that protects against theft, vandalism, fire, glass breakage, and weather-related damage.
- Ability to pay out of pocket: If you couldn't afford to pay for repairs or a new vehicle in the event of an accident, collision coverage is absolutely worth considering.