Collision insurance coverage pays to repair damages or refunds you for the actual cash value of your vehicle if it is totaled when you collide with something while driving.
Once your car is fully paid for, collision coverage becomes optional because there is no longer a lender to require you carry it. Learn what is covered and when it makes sense to carry collision insurance.
What Is Collision Coverage?
Collision coverage insures the costs for your vehicle only, not anyone else's. 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.
Your car insurance policy considers a collision to be with either another car or an inanimate object such as a fence or telephone pole.
How Collision Coverage Works
In most states, collision coverage is not part of the mandatory minimum coverage required to drive a vehicle in the state. It costs on average an extra $290 per year.
If you took out a loan to be able to purchase your car, the financial institution may demand that you purchase collision coverage so their asset is protected in the event of an accident.
Various situations qualify as a collision:
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, they will not have coverage to repair their vehicle.
Although 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.
Hitting a Tree
A falling tree is considered a comprehensive claim. Hitting a standing tree or even a tree which fell prior to you hitting it is classified as a collision.
To put it simply, hitting any inanimate object is considered a collision. Slamming into or even barely scraping 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.
Sometimes landing in a trench can cause considerable damage to your vehicle. Earth shoved up into the undercarriage of your car can quickly require a trip to a mechanic. Rolled vehicles are even more affected. Physical damage all over the car (and not from a peril considered eligible for comprehensive coverage) will always be covered under the collision coverage.
Types of Collision Coverage
Is it a 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. Here's what to expect:
- Aftermarket parts or used parts will be used to repair your vehicle. To get original OEM parts from the manufacturer, you will have had to select 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.
- If your vehicle is a total loss, an insurance claim adjuster will coordinate with you to determine what the actual cash value of your car was at the time of loss.
- Any recent repairs or part replacements should be factored into the actual cash value. Find receipts for any recent car repairs you have had done.
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 and Reimbursement
Sometimes the fault is not straightforward. 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 to get reimbursed for a claim after fault is determined. It allows you to get your vehicle fixed quickly and get reimbursed after the repair. 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.
Michigan drivers have a different set of collision rules to follow according to Michigan no-fault insurance. Whichever state you live in, if you are in an at-fault collision, you must have collision coverage selected on your car insurance policy to be paid for either repair or the value in case of a total.
- Collision coverage insures repairs to or replacement of your car when it strikes another vehicle or inanimate object.
- Drivers must actively elect collision coverage be part of their policy.
- Aftermarket parts will be used for the repair unless the policy specifies original replacement parts.
- Different states have different rules.