What is Collision Coverage?

Close up of car crashed into pole on remote road
••• John Lund / Getty Images

Collision coverage on your car insurance policy will repair damages to your vehicle, or refund you for the actual cash value of your car if it is totaled when you collide with something while driving your vehicle. That something could be either another car or an inanimate object like a fence or telephone pole. In most states, the coverage only applies when you are at-fault in an accident or do not know who caused the damage created by another vehicle. Collision coverage covers your vehicle only, not anyone else's.

Do I need to buy collision coverage?

In most states, collision coverage is not part of the mandatory minimum coverage required to drive a vehicle in the state. However, if you took out a loan to be able to purchase your car, the financial institution may demand that you purchase collision coverage so that their asset is protected in the event of an accident.

What Qualifies as a Collision?

  • Car Crash If your vehicle is in an accident with another car, you are in a collision. Collision coverage will apply to at least one of the cars involved. If the at-fault driver did not select collision coverage, he or she will not have coverage to repair their vehicle.
  • Pot Hole Because running over a pothole is frequently avoidable. Insurance carriers treat pothole damage as a collision. Collision coverage must be selected for repairs to the vehicle to be covered.
  • Tree Hitting a tree can do severe damage to a vehicle. It makes a difference in how the damage occurred. A falling tree is considered a comprehensive claim. Hitting a standing tree or even a tree which fell prior to you hitting it is regarded as a collision.
  • Guard Rail To put it simply, hitting an inanimate object is considered a collision. Slamming into or even barely scraping by a guardrail, stop sign, mailbox, or building would all be considered a collision. It makes no difference if the damage is a small scrape or a crushing blow, contact with an inanimate object resulting in damage to your vehicle is a collision.
  • Ditch Sometimes landing in a trench can cause considerable damage to your vehicle. Earth being shoved up into the undercarriage of your car can quickly require a trip to a mechanic. Rolled vehicles even more so. Physical damage all over the car not from a comprehensive coverage peril will always be covered under the collision coverage.

Repair or Total Loss

Assuming you have collision coverage, the insurance company has two options for making you whole again. Your vehicle will be repaired, or the actual cash value of your car will be paid out in the case of a total loss.

What to expect with repairs:

  • Aftermarket parts or used parts will be used to repair your vehicle. To get OEM parts, you will of had to of selected an additional endorsement to your policy, which only some insurance carriers offer.
  • The repairs to your vehicle should return your vehicle to its previous condition as if the damage never happened.

What to expect with a total loss:

Collision Deductible

Collision coverage usually comes with a deductible. You will be responsible for paying the dollar amount listed on your collision deductible. The deductible is set up at the time you add your vehicle to your car insurance policy.

Subrogation

Sometimes the fault is not cut and dry in a collision. It is possible to have both parties involved insisting they were not at fault. In this type of situation, you can file a claim under your collision coverage and have your insurance company work on subrogating for you.

Subrogation means you try and get reimbursed for a claim after fault is determined. It allows you to get your vehicle repaired in a faster time frame and get reimbursed at a later time. The reimbursement can wash away your at-fault claim status. Your insurance company is ethically required to help subrogate a claim for you. However, they are not required by law.

A collision can happen to anyone. As a driver, you are taking on the risk of a possible collision. Michigan drivers have a different set of collision rules to follow according to Michigan no-fault insurance. However, no matter what state you reside, if you are in an at-fault collision, you need collision coverage selected on your car insurance policy to have your vehicle either repaired or totaled out.