Collision coverage

What is collision coverage?

Collision insurance coverage is a type of auto insurance. It helps pay for repairs or replacement if your vehicle is damaged in a collision with another car or object, regardless of who is at fault. It’s optional coverage but it’s often required by lenders or leasing companies. If your vehicle is financed or leased, your lienholder may require you to have collision insurance coverage.

How does collision coverage work?

If you're involved in an accident where your car hits another vehicle or object, such as a pole, a guardrail or if it rolls over, collision coverage can help cover the cost of repairs. After you pay your deductible, your insurance company pays the remaining repair costs up to the actual cash value (ACV) of your car.

What are the benefits of collision coverage?

Collision coverage helps pay for repairs after a crash, no matter who caused it. This kind of protection can be a huge relief, especially if you're driving a newer, leased or financed vehicle. It helps cover expensive repairs so you can get back on the road with less financial stress.

What does collision coverage include?

Collision coverage protects your vehicle when it’s damaged in a crash with another car or object. It covers you even if you're the one at fault. Here are some common scenarios that are usually covered:

• Hitting another vehicle – Whether you rear-end someone or get hit pulling out of a driveway, you would be covered.
• Single-car accidents – Hitting a tree, fence or mailbox are examples of single-car accidents that are covered.
• Rollovers – Whether or not another car was involved, rollover accidents are included.
• Damage from potholes or road hazards – These are covered, including damage caused by unexpected bumps in the road.

It pays for repairs or the replacement value of your car, minus your deductible.

What does collision coverage exclude?

While collision coverage helps with crash-related damage, there are important limits. It doesn’t cover everything that could happen to your car. Here’s what it typically excludes:

• Medical expenses – These are typically covered by personal injury protection or medical payments.
• Damage to another person’s vehicle – This damage is covered under liability insurance.
• Theft, vandalism or weather damage – Covered by your comprehensive insurance policy.
• Mechanical breakdowns or wear and tear – This is not considered to be collision-related damage.

How much does collision coverage cost?

The cost of collision coverage can vary widely from driver to driver. It depends on things like your car’s value, where you live and your driving history. Here are the main factors that influence the price:

• Your vehicle’s value
• Your driving history
• Your location
• Your deductible amount

On average, drivers pay about $743 per year for collision coverage.

What is a collision coverage deductible?

A collision deductible is the amount you pay out of pocket before your insurance kicks in. Common deductible amounts range from $250 to $1,000. For example, if repairs cost $2,000 and your deductible is $500, your insurance company pays $1,500.

Collision coverage limits

Collision coverage pays up to your car’s ACV, which is its market value minus depreciation. If your car is totaled, your payout will reflect this depreciated amount, not the price you originally paid. This means the payout may not cover the full cost of replacing your vehicle, especially if it has significantly depreciated.

How to file a collision coverage claim

Filing a claim may feel overwhelming, but knowing the steps ahead of time can make the process much smoother. Your insurer will guide you through it, but it helps to be prepared. If you’re in an accident:

• Document the damage with photos
• File a police report if needed
• Notify your insurance carrier
• Submit the necessary claim forms and documentation
• Work with an adjuster and repair shop

Your insurance carrier will subtract your deductible from the payout. A VIU by HUB Advisor can help guide you through the process.

Do I need collision coverage?

Collision coverage isn’t legally required, but it may be mandatory if your car is leased or financed. If you own your car outright, it’s your choice. Consider your car’s value, your risk tolerance and whether you could afford repairs or a replacement out of pocket.

Not sure if collision coverage makes sense for your situation? A VIU by HUB Advisor can help you weigh the costs and benefits, especially if your vehicle is leased or financed.

Who should consider collision coverage?

Vehicle owners should consider collision coverage if:

• You lease or finance your vehicle (it’s often required)
• You own a newer or high-value vehicle
• You can’t afford to pay for repairs or a replacement out of pocket
• You drive in high-traffic or accident-prone areas

Collision vs. comprehensive insurance: what’s the difference?

When it comes to protecting your car, many drivers wonder whether they need collision, comprehensive or both. Understanding the difference between these two types of policies can help you avoid gaps in protection and unexpected repair bills.

Collision insurance covers damage to your vehicle when you hit another car or object, or when you’re involved in a single car accident. This includes accidents like rear-ending someone, hitting a pole or curb or rolling your vehicle. It applies regardless of who was at fault.

Comprehensive insurance, on the other hand, protects against non-collision damage. That means things like theft, vandalism, weather events like hail or flooding and accidents involving animals such as hitting a deer.

There’s no fault requirement for comprehensive claims. Most drivers carry both to ensure they have full coverage and peace of mind.

Real-life examples of collision coverage in action

It’s not always easy to picture how collision coverage works until you’re in a tough spot. These real-life scenarios can help you understand what’s typically covered. They also show how coverage can save you from costly repairs.

• You back into a pole in a parking lot. Collision covers the rear bumper repair.
• You hit a patch of ice, lose control and crash into a guardrail. Collision covers the damage.
• Another driver sideswipes you and they don’t have insurance. Collision may cover your costs after your deductible.

Each of these examples represents a covered collision under the policy. In these cases, insurance helps pay for the damage caused by the accident.

Common myths about collision coverage

Myth 1: Collision and comprehensive are the same
Truth: They cover different types of damage. Collision covers crashes. Comprehensive coverage protects against weather, theft or animal damage.

Myth 2: If the other driver is at fault, you don’t need collision coverage
Truth: Not all drivers have insurance. Collision insurance protects you regardless of who’s at fault.

Myth 3: Collision covers everything that happens to your car
Truth: Collision only covers damage from crashes—not theft, weather or vandalism.

FAQs

Is it better to have a $500 deductible or $1,000?

That’s a common question. And a smart one to ask. The right deductible really depends on what kind of financial safety net you want.

A $500 deductible means you'll pay less out of pocket after an accident, but your insurance premiums will be higher.

Conversely, a $1,000 deductible lowers your premium costs but increases your out-of-pocket expenses if you file a claim.

If you prefer lower monthly payments and can afford a higher cost in case of an accident, a $1,000 deductible might be better. If you want to minimize expenses after a claim and don't mind paying more monthly, choose the $500 deductible.

Can I drop collision coverage at any time?

Yes, if your car is paid off, you can remove collision coverage from your policy, but it's a good idea to think it through first. If your car is paid off and has a lower market value, it might make sense. Just make sure you’re comfortable paying for repairs or a replacement out of pocket if an accident happens.

Does collision coverage cover rental cars?

It depends on your policy. Some auto insurance policies extend collision coverage to rental vehicles, especially if you're renting a car for personal use. To be safe, check with your insurance company before renting, or consider purchasing the rental company’s insurance if you want extra peace of mind.