What is Collision Insurance?

You know that car insurance companies offer a really big range of different types of coverage and collision insurance is one of the most popular damage coverage of an auto insurance policy.

If you have an auto accident and it is your fault, your liability insurance will cover the damage you caused to other vehicles.


However, if you want your car to be covered, you must have collision insurance. Collision insurance is optional and very often purchased with comprehensive coverage.

On this page you will see:

What is Collision Insurance? Definition and Meaning.

Collision insurance coverage pays for damage to your auto when it collides with another auto or other kinds of object. It will help cover the cost of repairs.

No matter which fault it is, collision coverage is created to pay for the repair (or the replacement) of your vehicle in the case of an accident.
Collision insurance only pays for damage to your car – not for damage to other vehicles or objects.

In order to work your collision coverage, you’re typically required to pay a deductible when you file your claim.

It means when you get into a covered auto accident, you pay your deductible, and after that your collision coverage will help pay to repair/replace your vehicle.

Collision insurance is an optional coverage.

However, if you lease your car, or other types of loan is obtained on your vehicle, it’s very likely that you’re required to carry collision insurance.

In other words, you do not have to buy collision coverage, unless you are obligated by your lender.

If you do not have this option, you will need to personally finance the repair to your auto damage caused by a collision with another auto.

What does collision insurance cover and what is not typically covered?

Every auto accident is absolutely unique!
So what does collision insurance cover?

As we mentioned above, collision insurance cover your damage resulting from an accident! Not resulting from other natural disaster events (such as a severe storm) but from auto accidents.

Let’s sum what auto accidents can occur:

  • An accident with your vehicle and another vehicle (a traffic crash);
  • Your car is parked on the street and someone hit it;
  • Rolling over and other accidents involving only your car;
  • Accidents with other objects such as a sidewalk for example.

So, these accident types are covered by your collision insurance.

In addition to that, collision insurance may cover damages to your rental car. However, be aware of that rental car insurance coverages vary from state to state.


To make it these type of coverage clearer, let’s define what collision insurance do not cover.

What does collision insurance NOT cover?

It typically does not pay for damages that occur due to:

  • Natural disasters such as storms, water floods, thunder strike, tornado, and etc.;
  • Vandalism and theft;
  • Damage from fire;
  • Damage from riots;
  • Hail damage.

In addition to the list above, collision coverage does not cover costs connected to bodily injury.

Also, your collision insurance does not cover other drivers! Your liability insurance cover damages to the other vehicles, in case it is your fault for the accident.

It’s also important to mention that some collision insurance policies may not pay for damages from the following:

  • Hitting or being hit by an animal including birds, cows, bears, moose and etc.
  • Accidents in which you hit building structures such as houses and business buildings.
  • Accidents in which you hit other types of personal property such fence, doors, walls and etc.

Note that not all policies are the same! Before purchasing a collision insurance policy, it is essential to understand exactly what your policy cover.

What is the difference between comprehensive and collision insurance?

What if something happens to your vehicle that has no relation to an accident (something such as storm damage or hail damage)?
Liability and collision insurance cover accidents, but not these cases. These situations are covered by comprehensive insurance.

It is very common practice, in addition to your collision coverage, to purchase a comprehensive coverage.

What is comprehensive insurance?

When you hear the word “comprehensive,” you might think “all-encompassing”— but in car insurance terms, the word has a different meaning and explanation.

Comprehensive coverage protects your car against damages that are not related to a collision!

So the main difference between these two types of insurance is that collision insurance covers damages resulting from an accident, while comprehensive insurance covers damage from other events, such as storms and vandalism.

Let’s list what typically, comprehensive coverage include:

  • Natural Disasters (like hurricanes, storms, tornados and etc);
  • Fire;
  • Vandalism;
  • Theft;
  • Falling objects;
  • Damages to your car by animals;
  • Civil disturbances (like a riot that results in damage of your car).

Comprehensive insurance is also optional.

However, (like with collision insurance) many auto lenders and lease holders require your car to have comprehensive coverage.

Car insurance companies commonly offer collision and comprehensive coverages together. You may find these coverages called together as “physical damage coverage.”

There are different options on the market. Most companies offer to buy collision coverage only in case you are buying comprehensive coverage.
There are also companies that offer policies that provide comprehensive but not collision coverage.

Do I need collision auto insurance? When to drop it?

If you have a loan or lease on your vehicle, you are likely obligated to carry a collision insurance.
In addition, if you do not have a lease or loan on your vehicle you may decide to purchase collision coverage or not.

You may be tempting to save money on car insurance premiums by opting not to buy collision coverage.

But, before making the final decision there are some factors to consider. Maybe you should start with this situation – if your car was damaged, could you afford to repair or replace it?

If you are facing financial difficulties about your ability to repair your car or buy a new one after an accident, buying collision coverage could give you some peace of mind.

Your car’s value is another important factor to consider.

Older (or low-value), it may not be worth buying collision coverage, since it will only pay up to the estimated fair market value of your car.

Newer (or high-value), having collision insurance can protect you from paying a huge amount to repair or replace your car.

So, When to drop collision insurance?

If you have an older vehicle, or if your vehicle is in bad condition, then you may consider dropping this type of coverage.


Before making a decision to purchase or not, take the time to compare collision car insurance quotes, to decide how much coverage you need and to evaluate how much it would cost to fix or replace your car.

Download the following Collision Insurance Infographic in PDF for free

Collision Insurance Infographic

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