Collision insurance pays to repair or replace your car if you hit another vehicle or object

Collision insurance is optional coverage that covers damage to your own car when you're in an accident — whether you hit another car, a telephone pole, a guardrail, or any other object. Your insurance company pays for repairs (or the car's actual cash value if it's totaled), minus your deductible. This is different from liability insurance, which pays for damage you cause to someone else's property or injuries to other people.

Collision coverage does not cover theft, weather, vandalism, or hitting an animal — those fall under comprehensive insurance. It also does not cover damage from hitting a pothole or road debris unless you collide with another vehicle or fixed object in the process.

Most lenders and lease companies require you to carry collision insurance while you owe money on the car. If you own the car outright, collision is optional, though many drivers keep it if the car is newer or worth a significant amount.

Key Takeaways

  • Collision insurance covers damage to your own vehicle when you hit another car or object, regardless of who is at fault.
  • You choose your deductible (typically $250, $500, $1,000, or higher), and you pay that amount out of pocket before insurance covers the rest.
  • Lenders and lease companies almost always require collision coverage as long as you owe money on the vehicle.
  • Collision does not cover theft, weather, vandalism, or hitting animals — those are covered under comprehensive insurance instead.

How collision claims work after an accident

When you have a collision, you contact your insurance company and report the accident. You'll provide details about what happened, where, and when. The insurer will assign an adjuster who inspects the damage, gets repair estimates, and determines the payout amount.

If repairs cost less than the car's actual cash value, the insurer pays for repairs minus your deductible. If the car is totaled (repairs would cost more than the car is worth), the insurer pays you the actual cash value minus your deductible. You then own the vehicle as salvage, and the insurance company may sell it to a salvage yard.

The entire process typically takes one to three weeks, though it can be faster if damage is minor and estimates are straightforward. During this time, you may be able to rent a car through your policy's rental reimbursement coverage, if you have it.

Deductibles and how they affect your premium

Your deductible is the amount you pay toward repairs before insurance kicks in. Common deductible amounts are $250, $500, $1,000, and $2,500. Choosing a higher deductible lowers your monthly or annual premium, but it means you'll pay more out of pocket if you have a claim.

For example, if you have a $500 deductible and repairs cost $3,000, you pay $500 and insurance pays $2,500. If you choose a $1,000 deductible instead, your premium drops, but you'd pay $1,000 out of pocket for that same accident.

The right deductible depends on your financial situation. If you have savings to cover a $1,000 deductible and want lower monthly payments, a higher deductible makes sense. If you'd struggle to pay $1,000 suddenly, a lower deductible is worth the higher premium.

When collision insurance is required versus optional

If you have a car loan or lease, your lender or leasing company requires collision coverage. This protects their financial interest in the vehicle — if you total the car, they want to know the damage will be paid for. You cannot drop collision coverage while you owe money on the car, even if you want to.

Once you own the car outright (the loan is paid off), collision becomes optional. At that point, you decide whether the coverage is worth the cost. Many drivers keep it on newer cars or vehicles worth $10,000 or more. Drivers of older cars worth $3,000 or less often drop it to save on premiums, since the payout would be limited anyway.

Some states also require collision coverage if you have uninsured motorist coverage, though this varies. Check your state's insurance requirements or ask your agent about your specific situation.

Collision versus comprehensive: what each covers

Collision and comprehensive are often bundled together but cover different types of damage. Collision covers accidents where you hit something or something hits you. Comprehensive covers everything else: theft, vandalism, weather (hail, flooding, wind), hitting an animal, falling objects, and fire.

If a tree falls on your parked car, that's comprehensive. If you swerve to avoid the tree and hit a fence, that's collision. If your car is stolen, that's comprehensive. If you crash while driving, that's collision.

Most lenders require both collision and comprehensive. If you own the car outright, you can choose one, both, or neither — though dropping both leaves you with significant financial risk if anything happens to the vehicle.

What collision insurance does not cover

Collision does not cover damage from hitting a pothole, even if it causes significant damage. It also does not cover damage from hitting an animal (deer, moose, dog) — that falls under comprehensive. Collision does not cover wear and tear, mechanical breakdown, or damage from poor maintenance.

If you cause an accident and your collision coverage pays for your car's repairs, your liability coverage (required in all states) pays for damage to the other person's vehicle and any injuries they sustained. Collision only covers your own vehicle.

Collision also does not cover rental car costs, medical bills, or lost wages from time off work. Those are covered by separate optional coverages: rental reimbursement, medical payments, and uninsured motorist coverage.

How your driving record and age affect collision rates

Insurance companies charge more for collision coverage if you have recent accidents or traffic violations on your record. A clean driving history for three to five years typically qualifies you for better rates. Young drivers (under 25) and older drivers (over 70) usually pay higher collision premiums because they're statistically involved in more accidents.

Your location also affects the cost. Urban areas with more traffic and theft have higher collision premiums than rural areas. Some insurers offer discounts for safety features (airbags, anti-lock brakes, stability control) or for bundling collision with other coverages.

If you have an accident, your premium typically increases at renewal. The increase varies by insurer and state, but you can expect 10 to 40 percent higher rates for one accident. Shopping around after an accident sometimes reveals lower rates with a different company.

Frequently Asked Questions

Does collision insurance cover hitting a pothole?

No. Collision covers damage from hitting another vehicle or object, but potholes are considered road hazards. If you hit a pothole and damage your wheel or suspension, that damage is not covered. Some states allow you to file a claim against the city or county for pothole damage, but that is separate from insurance.

What happens if I'm not at fault in a collision?

Your collision coverage still covers your repairs minus your deductible. Your insurance company can then pursue the at-fault driver's insurance company for reimbursement (called subrogation). If successful, you may get your deductible back. However, you still pay the deductible upfront, and reimbursement is not may provide.

Can I drop collision insurance if my car is paid off?

Yes. Once you own the car outright, collision becomes optional. However, dropping it means you pay for all collision repairs yourself. Many drivers keep it on cars worth $10,000 or more because the potential repair costs are high.

Does collision insurance cover hitting a deer?

No. Hitting an animal is covered under comprehensive insurance, not collision. Comprehensive covers wildlife collisions, theft, weather, and vandalism. If you hit a deer, file a claim under your comprehensive coverage and pay that deductible instead.

Will my premium go up if I file a collision claim?

Usually yes. Most insurers increase your premium after a collision claim, though the amount varies by company and state. The increase typically lasts three to five years. Some insurers offer accident forgiveness programs that waive the increase for your first accident, so ask your agent whether you have this option.