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What is Collision Insurance?

Updated: September 2019

Collision insurance is a coverage that helps pay to repair or replace your car if it's damaged in an accident with another vehicle or object, such as a fence or a tree. If you're leasing or financing your car, collision coverage is typically required by the lender. If your car is paid off, collision is an optional coverage on your car insurance policy.


Video Transcript

What is collision coverage?

If you're shopping for auto insurance, you may consider collision coverage. But, do you know what it protects?

Collision coverage helps pay to repair or replace your vehicle if it's damaged or destroyed in an accident with another car, regardless of who is at fault.

That's different from liability coverage, which helps pay for damage to another person's car from an accident you cause.

After an accident, you are responsible for paying a specified dollar amount toward repairing your own car. That's called a deductible, and for collision coverage, it can vary.

Once you've paid your deductible, your collision coverage will help pay to repair or replace your vehicle, up to its actual cash value. If you owe money on your car loan, or lease your vehicle, you are typically required by law to have collision coverage. But, if you own your car outright, it's optional.

You may be thinking: If collision coverage is optional, why buy it?

Consider this: If you get into an accident involving another car or object, would you want to pay out of pocket to repair your car -- or even to replace it? If not, then collision coverage may be a good choice.

So, now you know that collision coverage can help pay for damages to your car after an accident involving another vehicle, regardless of fault.

After you've paid your deductible, collision coverage helps pay to repair or replace your vehicle up to its actual cash value. Collision coverage is typically required if you owe money on your auto loan or if you lease your vehicle, but if your car is paid off, it's optional.

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What Does Collision Insurance Cover?

Collision insurance helps pay to repair or replace your vehicle if it's damaged from:

  • A collision with another vehicle
  • A collision with an object, such as a fence or tree
  • A single-car accident that involves rolling or falling over

What Is Not Covered by Collision Insurance?

Collision insurance does not cover:

  • Damage to your vehicle not related to driving (examples: hail or theft)
  • Damage to another person's vehicle
  • Medical bills (yours or another person's)

Collision Coverage Deductibles and Limits

Collision coverage has a deductible, which is the amount you pay before your coverage helps pay for your claim. You can typically choose the amount of your collision deductible when you buy coverage.

Depending on your insurer, you may have several deductible amounts to choose from -- typically $0, $500 or $1,000. If you choose a lower deductible, your premium will likely increase. Likewise, If you choose a higher deductible, your premium may decrease. Keep in mind, however, you will have to pay your deductible out of pocket toward car repairs as part of a covered claim. So, if you choose a $1,000 deductible and your car is later damaged in a covered accident, you'd have to pay $1,000 toward repair costs. Common deductibles generally range from $250 to $1,000, however, the value of your car is an important factor to keep in mind when determining your deductible amount.

Collision coverage has a limit, which is the maximum amount your policy will pay toward a covered claim. Your collision coverage limit is typically the actual cash value of your vehicle (its value minus depreciation).

For example, say your car is totaled in a covered collision. Your insurer would cut you a check for the car's depreciated value, minus your deductible. Keep in mind that "depreciated value" means you may not be able to replace your old vehicle with one of a newer make and model. You'd likely have to use some of your own money to do that.

Why Buy Collision Coverage?

If you owe money on your car, or if you're leasing it, collision coverage usually isn't optional; most lenders and lease holders require it. If your car is paid off, however, you can choose whether to buy collision coverage.

One thing to consider: How much it would cost to repair or replace your vehicle if it were damaged or destroyed in an accident. If you couldn't afford to fix your car or buy a new one after a wreck, purchasing collision coverage could give you some peace of mind.

Have questions about collision coverage? Get in touch with a local agent to explore your options.

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This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2019 Allstate Insurance Company, Northbrook, IL.
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