Collision Coverage

Collision coverage pays to repair or replace your car when you hit (or are hit by) another vehicle or object. Unlike liability insurance, collision covers your car—not the other driver's.

What Collision Covers:

• Hitting another vehicle
• Being hit by another vehicle (even if not your fault)
• Single-vehicle accidents (backing into a pole, hitting a tree)
• Rolling your vehicle
• Potholes (in some states)
• Hit-and-run damage (if the other driver fled)

What It Doesn't Cover:

• Non-collision damage (theft, hail, vandalism—that's comprehensive)
• Medical expenses (that's bodily injury coverage)
• Damage you cause to other vehicles (that's liability)
• Normal wear and tear

Typical Deductibles:

• $500 (most common)
• $1,000 (saves 30-40% on premium)
• $2,000 (rarely chosen)

Rate Impact: At-fault collision claims increase rates by 20-40% for 3-5 years. The rate hike often costs more than the claim payout, especially for minor damage.

When Claims Don't Make Sense:

Example: $2,500 repair, $500 deductible, $1,800/year premium

• Insurance pays: $2,000
• Your rate increases 30%: +$540/year × 3 years = $1,620
• Total cost: $500 deductible + $1,620 increase = $2,120
• Pay out-of-pocket cost: $2,500
• Verdict: Nearly break-even, but claim stays on record. Borderline decision.

Should You Buy It?

Yes if:

• Your car is worth > $5,000
• You have a loan/lease (usually required)
• You're a new/young driver (higher accident risk)

Consider dropping if:

• Car value < $4,000
• Excellent driving record + safe area
• Annual premium + deductible > 15% of car value
• You can afford to replace the car

Required by Law? No. Only liability insurance is mandatory. But lenders require collision + comprehensive until your loan is paid off.