Collision Coverage: What It Covers and When to Drop It

In this guide

Collision coverage pays to repair or replace your own car after it hits another vehicle or an object, or rolls over, no matter who caused the crash. You pay a deductible first, and the insurer pays the rest up to the car's value. It's optional by law, but lenders and lessors almost always require it. If your car is older and paid off, you may be able to drop it, but only if you could cover the loss yourself.

What collision coverage pays for

The Insurance Information Institute (Triple-I) says collision coverage pays for damage to your car from hitting another vehicle or an object, such as a pole, guard rail, or mailbox, or from flipping over. It also lists pothole damage as a collision loss.

The key idea is that collision looks at what happened to your car, not who was at fault. If you back into a pillar in a parking garage, collision applies. If another driver runs a red light and hits you, collision can also apply, and your insurer may then try to recover its costs from the at-fault driver's insurer.

Collision coverage generally does not pay for:

• Injuries to you or your passengers. Other coverages, such as medical payments or PIP, may apply.
• Damage you cause to other people's property. That is covered by property damage liability.
• Theft, vandalism, fire, flood, hail, or hitting a deer. Those belong to comprehensive coverage.
• Normal wear and tear, mechanical breakdowns, or custom parts not listed on your policy.

Collision vs. comprehensive vs. liability

These three coverages are often confused. This table shows where each one fits.

For a full tour of every coverage, see our guide to car insurance coverage types, or read about comprehensive coverage on its own.

How a collision claim is paid

Here is the usual path from crash to payment. Details vary by insurer and state.

1. Report the claim. You contact your insurer, even if the other driver was at fault.
2. The car is inspected. An adjuster or a repair shop estimates the cost of repair.
3. Repair or total loss. If repairs cost less than the car is worth, they are paid minus your deductible. If repairs cost too much, the car may be declared a total loss.
4. Payment. The insurer pays the shop or you, depending on the situation. If there is a loan, the lender may be named on the payment.

If your car is totaled, the payout is based on its actual cash value at the time of the loss, which is roughly its market value, not what you originally paid. See what happens when your car is totaled for more.

Your deductible

Collision is usually sold with its own deductible, separate from your other coverages. Triple-I explains that when you're at fault, the insurer pays the repair cost minus your deductible. If another driver is at fault and your insurer recovers its payout from that driver's insurer, you may also get your deductible back.

A simple example from the Texas Department of Insurance: if you file a $1,500 collision claim and have a $500 deductible, the insurer pays $1,000. Choosing a higher deductible generally lowers the collision part of your premium, but you must be able to afford it when a claim happens. Our guide on how car insurance deductibles work goes deeper.

When collision coverage is required

No state requires collision coverage by law. But it is often required by contract:

• Financed cars. Lenders typically require collision and comprehensive until the loan is paid off, because the car secures the loan.
• Leased cars. Leases usually require both, often with a maximum deductible.

If you let required coverage lapse, the CFPB says your contract may allow the lender to buy coverage for you, which usually costs much more and protects only the lender. More on this in our guide to insurance for leased and financed cars.

When dropping collision may make sense

Once your car is paid off, the decision is yours. Triple-I advises drivers with older cars to do the math on whether collision still makes economic sense. Some points to weigh:

• The car's value. The most collision can pay is the car's value minus your deductible. On an older car, that may be small.
• The cost of coverage. Compare your yearly collision premium to what a claim would likely pay.
• Your finances. Could you replace the car from savings without hardship? If not, keeping coverage may still be worth it.
• Your risk. Where and how much you drive, and whether you park on the street, can affect how likely a loss is.

A commonly cited rule of thumb, also noted in our full coverage vs. liability-only article, is to consider dropping collision when the car's value is less than about ten times the annual collision premium. It's a starting point, not a rule.

Ways to keep collision but pay less

• Raise the deductible. This often lowers the premium. Pick an amount you could pay tomorrow.
• Ask about discounts. Many insurers offer discounts for safe driving, anti-theft devices, or low mileage. See our car insurance discounts checklist.
• Review at renewal. As your car ages, the balance between premium and payout shifts.

It also helps to compare quotes from several insurers using the same deductibles, so you see a true side-by-side picture.

Frequently asked questions

Does collision coverage pay if the accident was my fault?

Yes. Collision pays for damage to your car regardless of fault, minus your deductible. Your liability coverage handles the other party's damages.

Will a collision claim raise my rates?

It can. Triple-I notes that insurers often raise premiums after an at-fault claim above a certain amount, and the increase generally lasts about three years. Policies and rules vary. See how long an accident affects your insurance.

Is hitting a deer a collision claim?

Usually no. Triple-I says deer collisions are handled under comprehensive coverage. Check your policy wording.

Does collision cover a rental car?

Often your own collision coverage extends to a rental used for personal travel, but not always for fees like loss of use. Ask your insurer before you rent.

Can I add collision coverage after I buy a car?

Insurers can add it, but may require an inspection or a waiting period, and coverage generally doesn't apply to damage that already happened. Ask your insurer how it handles this.

Sources

• Insurance Information Institute – What is covered by collision and comprehensive auto insurance?
• Insurance Information Institute – What is covered by a basic auto insurance policy?
• Texas Department of Insurance – How to shop smart for auto insurance
• NAIC – What Does Auto Insurance Cover?
• Insurance Information Institute – Do auto insurance premiums go up after a claim?
• Consumer Financial Protection Bureau – Can my car be repossessed if I am late on my payments?