What Is Collision Insurance, and What Does It Cover?

Collision insurance pays for vehicle damage from most types of crashes, but may not be worthwhile for older cars.
Lacie GloverNov 6, 2020
What Is Collision Insurance, and What Does It Cover?

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Collision insurance sounds pretty straightforward, but it won’t cover every bill after a crash. Collision coverage pays to repair your own car’s damage when you hit another vehicle or an object such as a lamppost or fence. It may also pay if another driver hits your car and doesn’t have enough insurance to pay for the damage.

Collision insurance isn’t mandatory in any state, but lenders typically require it if you finance or lease a car. Here’s a little more about what collision car insurance will — and won’t — pay for, plus how to know if it’s worth the cost.

Collision insurance covers damage to your own car from:

If you’re in a crash and another driver is entirely at fault, their property damage liability insurance pays for damage to your car. Assuming they have it, you’d make a claim to their insurance first. This coverage is mandatory in every state except New Hampshire, which doesn’t require auto insurance.

However, in many states minimum limits are low — just $5,000 or $10,000. A driver with only state-required property damage limits wouldn’t have enough coverage to pay for a newer vehicle if totaled. Then, your collision insurance would kick in.

This is one reason lenders require collision and comprehensive coverage as long as you’re leasing or paying off a car: You could be , on the hook for thousands of loaned dollars if your car was totaled shortly after buying it.

Collision and comprehensive insurance, combined with liability insurance, is typically referred to as .

Usually, collision insurance is subject to a , a set amount subtracted from any collision claim check. You can choose your deductible amount, which typically ranges from $500 to $1,500.

For example, say you swerved to avoid hitting a squirrel in the road and accidentally hit a lamppost instead, and you have a collision deductible of $1,000. Your insurance company would pay for the cost to repair the damage to your car, minus $1,000.

If the cost of the damage was less than your $1,000 deductible, you wouldn’t want to make a claim because your insurer wouldn’t pay — and would likely increase your rates later for having a claim. If the vehicle was destroyed by the impact, your insurer would subtract $1,000 from before the crash and send you a payment for that amount.

This deductible would also apply if your car was still drivable, but the damage would cost more to repair than the value of your car, and the insurer declares it totaled. You could still repair your car, but it would be recorded as salvaged on the title. Some insurers won’t cover salvaged cars or will charge more if they do.

Keep in mind that your collision deductible applies even when you’re not at fault, but the other driver doesn’t have sufficient insurance to pay for the damage and you don’t have underinsured or uninsured motorist coverage.

If it seems unfair that you’d have to shell out to fix damage caused by someone else, you might want to consider adding a collision deductible waiver to your policy. Available only in some states, this waives your deductible if an uninsured driver causes an accident and your collision coverage has to pay.

Another way to reduce your collision deductible burden after an accident is by adding “” (which go by several monikers) to your policy. Some auto insurance companies will reduce your deductible by a certain amount — typically $100 — for each year you go without an accident or ticket. Details vary by company, but it generally costs extra and may not be worth it if you don’t end up getting into an accident.


The average annual cost of collision coverage in the U.S. was about $363 in 2017, the latest year for which data is available, according to the National Association of Insurance Commissioners. Your own cost may be higher, as this figure includes discounts and may account for group policies that are typically cheaper than an individual policy you could buy online.

Depending on the company, you might not be able to buy collision insurance without , or vice versa. This could be because you have an active loan or lease that requires both, or because your insurer requires one to purchase the other.

Collision insurance tends to cost a lot more than comprehensive insurance because collision claims are more common. Choosing higher deductibles can lower your premium, as long as you can cover the out-of-pocket costs.

Learn more in our explainer.

Much like your car, collision coverage becomes less valuable over time, because it will never pay out more than the vehicle’s value. If you don’t have a loan or lease requiring it, collision insurance eventually loses its worth, costing more to have than it would pay you after a crash.

Not sure when to drop collision insurance? To figure out whether it’s worth what you’re paying for it, start with the value of your car and your deductible. If you have a $1,000 collision deductible, it’s not worth paying for collision coverage on a vehicle worth $1,000 or less.


Next, it’s time to look at how much your collision insurance costs. If it isn’t on a recent bill, you can look on your auto policy’s , typically one of the first pages. If the cost of collision plus its deductible add up to more than your car’s value, you won’t see any benefit if your car is totaled, the worst-case scenario for this coverage.

This is the math:

If the number is:

Additionally, if there’s no way you could come up with the amount from step one in an emergency, keeping collision insurance makes sense. Also keep in mind that if your car wasn’t totaled, the claim check would be for less than the first number you calculated.

Even if you decide collision insurance is worth it for now, revisit the math as your car ages and any time you get .

On a similar note...
Dive even deeper in Insurance