Collision insurance covers damage to your car from hitting another vehicle or object, but only up to your car's actual cash value minus your deductible

Collision coverage pays for repairs or replacement when your car strikes another car, a tree, a guardrail, a pothole, or any other object. It does not cover theft, weather, vandalism, or damage from another car hitting you — that is what comprehensive insurance handles. If you have a loan or lease on your vehicle, your lender almost always requires you to carry collision coverage. If you own the car outright, collision is optional, but the cost of skipping it can be steep if you cause an accident.

The insurance company pays the repair bill minus your deductible — typically $500 or $1,000, though you can choose lower or higher amounts. If your car is worth $8,000 and repair costs are $6,000, and your deductible is $500, the insurer pays $5,500 and you pay $500. If the car is totaled and worth $8,000, the insurer pays $7,500 (minus your deductible). You never receive more than the car's actual cash value, regardless of how high your repair bill runs.

Key Takeaways

  • Collision covers damage when your car hits something or someone hits you; it does not cover theft, weather, or vandalism.
  • Your insurer pays up to your car's actual cash value minus your deductible, never more.
  • If you finance or lease your vehicle, collision coverage is required by your lender.
  • Choosing a higher deductible lowers your monthly premium but means you pay more out of pocket when you have an accident.
  • Collision does not explore if someone else causes the accident and their insurance pays; their liability coverage handles your repairs.

What collision actually pays for

Collision covers the cost of fixing or replacing your vehicle after an impact. This includes accidents where you hit another car, a stationary object (mailbox, fence, building), an animal large enough to cause structural damage, or a pothole deep enough to damage your suspension or wheels. It also covers accidents where another driver hits you — though in that case, the other driver's liability insurance should pay, and your collision coverage acts as a backup if their insurance is insufficient or unavailable.

The repair or replacement must be necessary because of the collision itself. If your car was already broken and the accident made it worse, the insurer pays only for the damage caused by the impact, not the pre-existing condition. If your car is declared a total loss — meaning repair costs exceed 70 to 80 percent of its actual cash value, depending on your state — the insurer pays the car's current market value minus your deductible, and you surrender the vehicle to them.

What collision does not cover

Collision does not pay for damage from weather, flooding, hail, or falling objects like tree branches. That is comprehensive coverage. Collision also does not cover theft, vandalism, broken windows from a rock thrown by another car, or damage from an animal collision unless the impact causes structural damage (hitting a deer counts; a bird hitting your windshield does not).

Collision does not cover damage to other people's property. If you hit someone's fence or another car, your liability coverage pays for their repairs, not your collision coverage. Collision also does not cover medical bills or lost wages if you are injured — that is what personal injury protection or medical payments coverage handles. And collision does not explore if you were driving without a valid license, under the influence, or using the car for commercial purposes like rideshare or delivery, depending on your policy terms.

How your deductible affects what you pay

Your deductible is the amount you agree to pay toward repairs before your insurance kicks in. Common deductibles are $250, $500, $1,000, and $2,500. Choosing a higher deductible lowers your monthly premium — sometimes by 15 to 40 percent — because the insurer's risk is smaller. Choosing a lower deductible raises your premium but means you pay less out of pocket when an accident happens.

The math depends on how often you expect to have an accident and how much you can afford to pay if one occurs. If you are a careful driver with a stable income and savings, a $1,000 deductible might make sense because you save money on premiums over time. If you are a new driver, live in a high-accident area, or have limited savings, a $500 deductible might be worth the higher premium because you avoid a large unexpected bill. Your deductible applies to each accident separately — if you have two collisions in one year, you pay your deductible twice.

When collision is required versus optional

If you have a car loan or lease, your lender requires collision coverage as a condition of the loan. They want to protect their investment in the vehicle. Once you pay off the loan, collision becomes optional — you can drop it if you choose. Many people drop collision on older cars because the premium becomes high relative to the car's value. If your car is worth $3,000 and collision costs $400 per year with a $1,000 deductible, you would need to go 7 to 8 years without an accident just to break even.

If you own your car outright and decide to carry collision anyway, you control whether to keep it or drop it. Some people keep it for peace of mind; others drop it to lower their monthly bill. There is no legal requirement to carry collision if you own the car free and clear, though your state does require you to carry liability insurance if you drive on public roads.

How collision interacts with other coverage

If another driver causes an accident and their liability insurance covers your repairs, your collision coverage does not come into play. Their insurer pays your repair bill directly. Your collision coverage only pays if the other driver is uninsured, underinsured, or if you are at fault.

Uninsured motorist property damage (UMPD) coverage, available in some states, covers your repairs if an uninsured driver hits you. If you have UMPD, it typically pays before your collision coverage does, and it may have a lower deductible. Comprehensive coverage handles theft, weather, and vandalism — not collisions. You can have collision without comprehensive, but most insurers require both if you are financing the car. Liability coverage pays for damage you cause to other people and their property, not your own car.

What happens if your car is totaled

If repair costs exceed your state's total loss threshold (usually 70 to 80 percent of the car's actual cash value), the insurer declares the car a total loss. They pay you the car's current market value minus your deductible. You then own the salvage title, meaning the car is no longer roadworthy and cannot be registered for normal driving. The insurer typically takes possession of the vehicle.

The actual cash value is not what you paid for the car or what you owe on a loan — it is what the car is worth today, based on mileage, condition, and market data. If you owe $10,000 on a car worth $8,000 and it is totaled, your collision coverage pays $7,500 (minus your deductible). You still owe the lender $2,500 or more. This is called being "upside down" on your loan. Gap insurance covers this shortfall, but it is a separate purchase and not included in collision coverage.

Frequently Asked Questions

Does collision cover hitting a pothole or curb?

Yes, if the impact causes damage to your suspension, wheels, or undercarriage. Collision covers damage from hitting any object, including road hazards. However, the insurer may deny the claim if they determine the damage was pre-existing or not caused by the specific impact you reported.

What if I hit a parked car and the owner is not around?

Your collision coverage pays for your repairs minus your deductible. You are responsible for leaving a note with your contact information and reporting the accident to your insurer. The other driver's repairs are covered by your liability coverage, not your collision coverage.

Can I use collision to pay for a rental car while mine is being repaired?

No, collision does not cover rental car costs. You need a separate coverage called rental reimbursement or transportation coverage for that. Some policies include it automatically; others offer it as an add-on for a few dollars per month.

Does collision cover accidents caused by weather, like hydroplaning in heavy rain?

No. If you hydroplane and hit another car or object, collision covers the impact damage. But if you hydroplane and crash into a tree, collision covers that too — the coverage is based on the impact, not the cause. However, if water damage alone causes the problem without an impact, comprehensive coverage applies instead.

What if I cause an accident but the other driver does not have insurance?

Your collision coverage pays for your repairs minus your deductible. Your liability coverage does not explore because you are at fault. If the other driver sues you for their damages and your liability limits are too low, you could be responsible for the difference out of pocket.