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Collision insurance is designed to protect your car. If your vehicle is damaged in a covered event, it could significantly reduce your out-of-pocket costs if you need to get it repaired or have to buy a new car.
Collision insurance is an optional coverage that you can add to your auto insurance policy. States don’t require it, but if you have an auto loan or lease, your lender will probably require you to buy collision insurance. Even if you own your car outright, collision coverage is worth considering if fixing your car after an accident would strain your budget.
What does collision insurance cover?
Collision insurance covers damage to your car when:
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You hit another vehicle or object, whether that’s a guardrail, building, or tree
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You experience a single-vehicle accident
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You drive over a pothole
Some collision policies also include emergency roadside assistance.
What isn’t covered by collision insurance?
Collision insurance does not cover:
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Damage to other people’s cars – that’s where your liability insurance coverage comes in
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The cost of medical bills and legal fees resulting from an accident, whether they’re your bills or another driver’s or passenger’s
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Theft, vandalism, animal strikes, or natural disastes – these events are covered by comprehensive car insurance
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Damage due to normal wear and tear or mechanical issues
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Damage caused by illegal activity
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The cost to repair modifications that your insurer didn’t agree to cover
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Damage to your personal possessions
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Damage incurred when an excluded driver was at the wheel
Learn more: Does car insurance cover flood damage ?
What to know about collision insurance deductibles and limits
For collision coverage, the deductible is typically $500 or $1,000. Opting for a lower deductible usually results in a higher premium. The opposite is also true – so if you’re looking to reduce your insurance costs, you could consider raising your deductible. The caveat is that if your car is damaged and you need to file a claim, you’ll have to pay more out of pocket.
Like other types of insurance, collision insurance has coverage limits. This is the maximum amount your insurer will pay toward a claim. It’s generally equal to your car’s actual cash value , after factoring in depreciation.
How much does collision coverage cost?
The average annual cost of collision insurance nationally was around $400 in 2022, according to the National Association of Insurance Commissioners . That’s about a third of the average full-coverage car insurance premium of $1,258.
Just be aware that average annual costs of collision insurance vary greatly from state to state – from an average of $272 a year in Wisconsin and South Dakota to $586 a year in Washington D.C. The value of your car is another important factor. If you have higher repair costs, you’ll likely pay more for collision insurance.
You can also expect your premiums to go up as your risk of having an accident increases. So if you’ve had prior accidents or are an inexperienced driver, you’ll likely pay higher premiums. Collision car insurance for teens, for example, is significantly higher than it is for middle-aged drivers without recent accidents.
Learn more: How to get the most affordable car insurance for your teen driver
Is collision coverage required?
If you’re leasing or financing your car, your lender will likely require that you have full coverage car insurance , which includes collision. That includes collision and comprehensive car insurance, as well as the liability car insurance required under your state laws.
If you fail to buy collision and comprehensive coverages, your lender will likely select them for you – often at a much higher price – then add the cost to your loan balance. They do this to protect the value of their collateral.
Other considerations if you have collision insurance
Your insurance company may offer programs to help you save money on your collision coverage. That might include:
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Collision deductible waiver.This can reduce your out-of-pocket costs by waiving your deductible if you’re involved in an accident. It typically only applies to accidents caused by identified uninsured drivers. Collision deductible waivers aren't available in all states, but they are worth looking into since a collision deductible waiver can be a standard part of your collision coverage policy.
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Accident forgiveness.With accident forgiveness , your insurer agrees not to raise your premium after your first accident. However, insurers may exclude accidents that result in injuries or expensive damages. To qualify, you’ll likely need to be an experienced driver with a recent accident-free record. Adding accident forgiveness to your auto coverage could spare you the premium hike that often follows a collision claim.
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Disappearing deductibles.Some insurance companies offer this perk to reward drivers who maintain a claim-free record. For every year that you do not file a claim, your deductible is reduced, typically by $50 or $100 per year.
Learn more: How much does car insurance increase after an accident ?
When to drop collision insurance
This question might be top of mind as your car’s odometer rises and its value decreases. According to Kelley Blue Book , you might consider dropping collision coverage if your car’s value is less than 10 times the annual premium. You’ll want to do the math to consider your financial risk tolerance before making this decision.
Is collision insurance worth it?
If you lease or finance your car, you likely won’t have a choice as most lenders require full coverage car insurance. But you’ll have more flexibility if you own your car outright. Collision insurance may be a good investment if you have a valuable car that would be expensive to repair or replace – and you don’t have the funds on hand to cover it. Also, if you don’t drive the car that often, the cost of collision insurance might not be worth it.
Comprehensive vs. collision insurance
Comprehensive and collision insurance are both part of a full coverage car insurance policy, but they cover different things.
Comprehensive insurance:
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Covers damage to your car that’s caused by something other than a collision
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That typically includes weather events, theft, vandalism, and animal strikes
Collisison insurance:
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Covers damage to your car that’s caused by a collision with another vehicle or an object, like a tree or telephone pole
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Also covers damage caused by rollovers and potholes
Should you buy gap insurance along with collision coverage?
If you get into an accident and the car is a total loss – meaning that the cost to repair it exceeds the car’s value – your collision coverage will reimburse you for the actual cash value of your vehicle at the time of the accident. But if you owe more than that on your auto loan, you’ll be responsible for covering the difference. Gap insurance is an optional add-on coverage that can bridge that gap for you. According to the Insurance Information Institute , “On most auto insurance policies, including gap insurance with collision and comprehensive coverage adds only about $20 a year to the annual premium.”
Collision insurance frequently asked questions
Can I get collision insurance without comprehensive car insurance?
If you own your car and don’t have an auto loan or lease, you can choose to buy collision insurance and not comprehensive insurance. Each one covers different things, and the right policy for you will depend on how much coverage you're comfortable carrying. Your risk profile, financial situation, and car’s value will also come into play.
Do I need collision insurance if I’m an excellent driver?
Even if you have a perfect driving record, accidents happen. Collision insurance can provide peace of mind and reduce your out-of-pocket costs if you’re at fault in an accident and your car is damaged or totaled. If you feel that your risk profile is relatively low, you could always opt for a lower coverage limit if your lender allows it.
