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Collision loss car insurance

Comprehensive and collision insurance are two types of car insurance that are optional for many drivers. States do not currently require drivers to obtain these coverage options, as they do with liability insurance.

While comprehensive and collision auto insurance are frequently discussed together, they can be purchased individually or jointly. Bear in mind that these coverages usually do extend to rental cars you may drive, but do not extend protection should you have an accident while driving a friend's car. Auto insurance typically follows the vehicle, not the driver, with the exception of rental cars.

  • What is comprehensive?
  • What is collision insurance?
  • Comprehensive vs Collision
  • Do you need it?
  • Coverage limits
  • How much does it cost?
  • Savings and discounts
  • Filing a claim
  • Should you drop coverage?

Collision and comprehensive are referred to as "physical damage" coverages because they cover damage to your vehicle. If you finance or lease your vehicle, your lender will require you to carry this auto insurance.

What is comprehensive auto insurance?

Comprehensive refers to auto insurance that covers damage to your car that is not caused by a collision. The word "comprehensive" means "completely or broadly," according to Merriam-Webster's dictionary. So, it's understandable that insurance buyers might think that "comprehensive" means "full coverage," or that it may reimburse them for any kind of damage to their cars - but that's not the case.

What does it cover?

Examples of items covered by comprehensive insurance include damages caused by:

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  • Windshield repair*
  • Damage caused by falling or airborne objects like hail, rocks or tree branches.
  • Theft
  • Vandalism
  • Fire
  • Natural disasters
  • Civil disturbances
  • Striking an animal (including deer) or bird

*Generally, most auto insurers cover 100 percent of the cost to repair smaller cracks. If your windshield needs to be replaced, you normally will have some out-of-pocket costs, in the form of your deductible. Your deductible is the amount you owe before your physical damage coverage, collision or comprehensive, kicks in. You choose your deductible amount at the start of your policy.

Comprehensive coverage does not pay for damages triggered by a collision, thus it is also known by the name "other than collision."

Natural disasters covered by comprehensive coverage includes damages caused by hurricanes, tornadoes, wind storms, and flood waters.

What is collision insurance?

Collision auto insurance covers damage to your vehicle caused by contact with another vehicle or object, including rollovers. Your collision coverage covers your vehicle regardless of who is at fault for the damage.

What does it cover?

Examples of items covered by collision insurance include damages caused by:

  • Hitting a tree or telephone pole
  • Colliding with a building, for example the drive-through window at your bank
  • Rolling your car
  • Hitting a pothole or curb
  • Backing into another car
  • Being hit by another car

Collision coverage comes with a deductible, which means you are responsible for some of the initial cost to repair your vehicle. Deductibles typically range from $250 to over $1,000 (per event, not per year). If you have a $500 deductible, and the drive-thru incident causes $1,000 in damage, you'll pay $500 and your insurer will pay $500.

If another vehicle is responsible for your car's damage, but you use your collision coverage for the claim, you still owe your deductible. However, your auto insurance company should subrogate (try to recover your repair costs from the at-fault party). If it is successful in its subrogation, your deductible may be refunded to you.

Comprehensive vs collision

It may not always be obvious which type of physical damage insurance coverage applies, collision or comprehensive. Both types of policies are optional (from a legal perspective, though if your car is financed or leased, your lender will require them). Both pay for damage to your vehicle and both come with deductibles. However, there are many differences between the two coverages, and it is wise to purchase both if you want solid protection.

In general, comprehensive auto insurance pays for damages when humans have little or no control over the incident - for example, flood or mudslide damage or a deer running into your car. Collision takes care of damages that occur when a driver has more control over the situation - if, for example, you are rear-ended , or someone sideswipes you in a parking lot.

What if you hit a tree while avoiding a deer in the roadway? Should you file this as an animal damage (comprehensive) claim or collision claim? While you, the driver, do not control the path of deer, you do control your car. Even though the primary cause of damage was a suicidal deer, the ultimate ruin to your car happened because you drove your vehicle into a stationary tree, thus, it's a collision claim. If instead you hit the deer, your comprehensive coverage would cover the claim. The table below lists a few claims, and which types of insurance applies.

Incident Description

Type of Claim

Damage from hitting a boulder in the road

Collision

Damage from a boulder rolling into your car

Comprehensive

Tree limb falls onto car roof

Comprehensive

Car runs into fallen tree in road

Collision

Smashed window from someone breaking into your car

Comprehensive

Window broken from hit-and-run driver running into your car

Collision

A notable difference between collision and comprehensive coverage is that you are more likely to see future car insurance rate increase from collision claims than you are from comprehensive claims. Collision claims may be your fault, and if so, expect your rates to rise. Typically, comprehensive claims are not "at-fault" incidents so your rates should not rise, some state laws mandate protection against rate increases related to comprehensive auto insurance claims.

Hit and run accidents

Hit-and-runs present a special case, and sadly, they are not uncommon. According to the AAA Foundation for Traffic Safety, approximately 11 percent of all traffic accidents involve hit-and-run drivers. If another driver runs into your vehicle and leaves the scene without exchanging information, do your best to get a license number, description of the car and driver - if you are present during the incident.

Hit-and-run accidents are covered by collision insurance, since it pays regardless of who is at fault. However, to prove that you weren't at fault, do your best to jot down the license plate number and description of the car that hit you, if you were present during the incident, and file a police report. These are great steps to prove that you are not trying to file a fraudulent claim.

It is important to file a police report right away. Larry Peyton of Farmers Insurance in Incline Village, NV, says that neglecting to file a police report and provide identifying information can cause your insurance rate to increase. That's because the insurer has no way of knowing if another party actually caused the damage, or if you're lying to protect yourself or a family member.

If your car is damaged while parked and unattended, the source of damage may not always be apparent. Find out if any cameras captured the incident or whether anyone witnessed it.

Hit-and-run insurance can seem confusing, but we have all the tools to make you feel more comfortable.

Do you need comprehensive and collision insurance?

Metropolitan auto insurance claims departmentJust because comprehensive and collision coverages aren't legally mandated doesn't mean you don't need these types of auto insurance. The law doesn't require you to wear a coat when it's 10 below zero out, either, but most people would say it's a good idea.

"One of the biggest mistakes people make is not having the coverage," says Peyton. "Because it's almost always the person who can't afford an unexpected expense who decides to try and save a little money by dropping coverage."

Without comprehensive and collision insurance, you are at risk for covering all repairs or the total replacement of your car out-of-pocket.

Use our coverage calculator to find the recommended coverage that is right for you.

Auto insurance coverage calculator>

If you have financed your car and still owe a balance, you probably won't have a choice -- your lender will almost certainly require comprehensive and collision insurance (and even dictate how high a deductible you can choose). Those who own their cars outright must decide if it makes sense to buy this additional coverage. If you want your car protected from damages from collisions and weather, fire and theft, it's a no-brainer, buy the coverage.

Local conditions may tip the balance in favor of buying insurance. If you live near a designated "open range," for example, cattle are not required to be fenced in. Not only are you more likely to collide with them, you can be held liable for damage to livestock. People who drive frequently in wooded areas may have a high risk of colliding with a deer. Your car's damages could be a comprehensive claim and damage to livestock would be a liability claim.

"There are plenty of uninsured drivers out there," cautions Penny Gusner, of Insure.com. "Uninsured motorist property damage isn't offered in all states and where it is offered, the limits may be low, such as $2,500. Some states also have low limits for property damage liability, such as California's $5,000 limit, and an at-fault party's insurance may not cover your entire loss. Collision coverage may help you fully recoup damages in these scenarios."

According to an Insurance Information Institute study, 77 percent of insured drivers purchase comprehensive coverage and 72 percent carry collision insurance. Of those who carry comprehensive coverage, analysts at the Insurance Service Office (ISO) report:

  • 2.6 percent of people with comprehensive coverage filed a claim in 2013.
  • Claims averaged $1,621.

The state in which you live can be an important factor in this auto insurance decision. In California, Colorado, Georgia, Illinois, Louisiana and Ohio, for example, your uninsured motorist coverage will not cover your vehicle in the event of a hit-and-run. You are only protected if you also purchase collision coverage.

If your car is financed, collision and comprehensive may not be enough coverage. If you owe more than the value of the car, you also should consider gap insurance coverage (referred to sometimes as lease/loan payoff coverage). Your physical damage coverages will only pay up to the value of your vehicle at the time of the accident; gap insurance will then pay the difference between that value and what you owe to your lender. So, if the car is worth $15,000 and you owe $18,000, gap insurance can help cover those few thousand dollars you'd have to pay out-of-pocket otherwise. To get gap insurance, you must carry collision and comprehensive on your vehicle.

Comprehensive and collision insurance coverage limits

Unlike liability coverage that comes with specific coverage limits, collision and comprehensive insurance tops out at the actual cash value (ACV) of your vehicle, minus your deductible. Your car’s ACV is its fair market value the immediately before a total-loss accident occurs. Thus, if your car is worth $20,000 and your deductible is $500, you could receive up to $19,500 for the car. Your settlement should also include taxes and fees you paid at purchase, since you will need to pay similar fees for your replacement vehicle.

If your car is damaged so that the cost of repairs passes your insurance company’s total loss threshold, you should receive the car’s ACV (minus your deductible amount) rather than a payment to repair your car. The total loss threshold varies but typically ranges from around 70 percent to 100 percent of the ACV. State total loss thresholds are taken into account, but insurance companies can determine that a vehical is a total loss before the cost to repair reaches the state’s threshold. For example, in Colorado the state’s threshold is 100 percent of the car’s value, but your insurer’s internal guidelines may say to total out a car when repair costs reach 75 percent of the car’s value.

The ACV your insurance company offers you as a settlement may not match up to what you believe your car is worth. If that is the case, negotiate with your insurer by bringing proof that cars from the same model year, in the same condition of your pre-accident vehicle, are being sold for higher prices in your area.

Comprehensive and collision coverage won’t pay more than your car’s ACV. If you owe a lender more than the value of your vehicle, you should obtain gap insurance that covers the difference between the ACV paid by your insurer and what you still owe the lender.

If you have a collectible vehicle whose value is extremely high or hard to determine, explore a specialty car insurance policy featuring collision and comprehensive coverage with an agreed upon value for your vehicle. This allows a restored classic to be insured for its true worth instead of being compared to unrestored vehicles of the same age in a total loss situation.

If your car is not a total loss, then your insurance company should pay for your damages, minus your deductible. This means if repair costs are $2,500 and your deductible is $500, your insurance company should pay out $2,000.

How much does comprehensive and collision coverage cost?

The cost of car insurance coverage depends on many rating factors, from your age, gender and driving record to your location and credit rating. Especially important for collision coverage rates is the type of car you drive and your driving record.

Insurance companies have internal claims information on your model car, and if the rate of claims and/or repairs is high, you may have to pay more for your coverage. If your car has a high theft risk, your comprehensive rate is likely to be a bit higher.

Your driving record also shows what type of risk you are to car insurance providers. If you're accident-prone and have multiple past claims, expect to pay more for your collision coverage.

Location is also a big factor influencing cost, if you live in a congested, urban area you'll pay more than someone in a rural area. Just as someone in an area that is prone to hail storms (and thus hail claims) will pay more than someone who lives where weather claims are low.

Average costs for coverage vary by state, with the US average being $290 per year for collision coverage, and $134 for comprehensive coverage. Depending on the value of your vehicle, this can be quite inexpensive, considering that if your car is totaled in an accident, you should receive the actual cash value (ACV) for your vehicle, minus your deductible. Your car's ACV is the fair market value of the vehicle the moment before the accident (damage) occurred.

The chart below breaks down collision and comprehensive costs by state. States with lower-than-average costs are shown in green, while those with higher-than-average costs are shown in red.

Average Annual Expenditures for Auto Insurance
Source: Insurance Information Institute, 2015
State Collision Comp Both
Alabama $287 $140 $428
Alaska $365 $142 $508
Arizona $245 $180 $426
Arkansas $295 $175 $471
California $348 $98 $446
Colorado $252 $147 $400
Connecticut $334 $121 $455
Delaware $286 $108 $394
D.C. $437 $227 $665
Florida $234 $105 $340
Georgia $316 $151 $467
Hawaii $289 $101 $390
Idaho $205 $107 $313
Illinois $273 $110 $383
Indiana $233 $113 $346
Iowa $201 $164 $365
Kansas $244 $211 $456
Kentucky $247 $124 $372
Louisiana $372 $204 $576
Maine $241 $90 $331
Maryland $319 $143 $462
Massachusetts $343 $125 $469
Michigan $368 $142 $511
Minnesota $205 $166 $371
Mississippi $291 $186 $478
Missouri $253 $155 $409
Montana $247 $190 $437
Nebraska $218 $192 $410
Nevada $289 $114 $404
New Hampshire $265 $96 $361
New Jersey $356 $117 $474
New Mexico $262 $163 $425
New York $345 $147 $493
North Carolina $248 $115 $363
North Dakota $216 $225 $442
Ohio $243 $107 $350
Oklahoma $289 $185 $474
Oregon $203 $86 $290
Pennsylvania $296 $124 $420
Rhode Island $357 $116 $473
South Carolina $239 $156 $395
South Dakota $195 $214 $409
Tennessee $280 $126 $407
Texas $345 $189 $535
Utah $247 $103 $350
Vermont $269 $111 $381
Virginia $254 $125 $379
Washington $241 $102 $343
West Virginia $313 $189 $502
Wisconsin $200 $119 $320
Wyoming $285 $234 $529
United States $289 $134 $423

Saving on comprehensive and collision insurance

There are a few things you can do to pay less for comprehensive and collision insurance:

  • Bundle auto insurance with home insurance
  • Choose a car that's less-expensive to insure
  • Improve your credit score
  • Drive less
  • Improve your driving record
  • Increase your deductible
  • Drop your coverage

Peyton says that by far the best way to save on optional coverage for your car is to combine your auto and homeowner's insurance. He also recommends looking for special discounts--for safe drivers and good students.

Increasing your deductible amount can reduce your premiums. How much you can save varies from one insurer to the next but typically is anywhere from $50 to $200 per year if you raise your deductible from $500 to $1,000.

The car you choose is a major factor on costs, but can also help you save. Many car insurance companies offer collision discounts for safety features, such as air bags and anti-lock brakes. Comprehensive discounts are given for anti-theft devices. You can even get a collision discount for a new car.

Certain occupations may qualify for discounts, including:

  • First responders
  • Doctors
  • Nurses
  • Military personnel
  • Engineers
  • Credit union employees
  • Scientists
  • Teachers/professors
  • Certified public accountants (CPAs)
  • Auto club members
  • Alumni association members
  • Certain professional groups

Different insurers throw goodies to a variety of drivers in "low risk" professions, but if you don't ask, you may not get a discount to which you're entitled.

Filing a claim

If you've decided to purchase comprehensive and collision insurance, you may be wondering how much you should buy. You actually can't choose how much comprehensive and collision coverage to buy; the most your insurance will pay out is the car’s actual cash value – what the car was worth on the open market just before the damage occurred – minus your chosen deductible amount.

You can negotiate the actual cash value of your car in the event of a total loss by providing examples of similar cars. Settlements should include taxes and fees paid at your original purchase point.

You may be reluctant to file a claim for comprehensive or collision damages unless absolutely necessary because your rate could increase. However, rates don't automatically go up when you make a claim.

It depends on your insurer's rules, state laws, the situation, and whether you have accident forgiveness. Here are some of the factors that might be considered:

How serious is the damage? If some vandal scratches your paint, that's less likely to lead to an increase than if he pushes your car off a cliff. More damage can cause a bigger rate increase.

If the damage is minor--a bumper needs to be replaced for $750--instead of major--the whole front end was taken off and will cost $5,000 to fix--you may not see a rate increase since the claim hasn't crossed your insurer's monetary threshold that causes a surcharge (rate increase) to occur.

Who is at fault? In many cases, your car insurance rates will increase if the accident is your fault, but not if the other driver is at fault. However, some companies will still increase your premium because you're statistically more likely to be involved in another accident. Filing an insurance claim can be a difficult decision.

How badly does the insurer want to keep your account? Safe drivers are cheaper for car insurance companies to cover. If you've been with your insurer for a long time with no problems, you may get accident forgiveness, meaning your first accident won't harm your rates.

How many claims you've had. One collision or comprehensive claim may not raise your rates, but if you've put in multiple claims - of any kind - your rates are likely to increase or your policy may not be renewed at the end of your current period. You're proving to be too high a risk if you have a multitude of claims.

In general, one or two comprehensive claims should not cause your car insurance rates to rise. These incidents are normally thought of as no-fault, and some states' laws forbid insurers from increasing rates due to a comprehensive claim. However, if you have three or more comprehensive claims, the number of claims (not type of claim) can cause your rates to rise.

For collision coverage, it's wise to only make a claim for major damage. If your claim is barely above your deductible amount, pay out-of-pocket so that you're not using a claim on something you could afford to pay yourself and avoid risking three to five years' of surcharges by your insurer.

When should you consider dropping coverage?

Many advisors recommend dropping your comprehensive coverage when your car's value diminishes to the point that you can't buy much coverage. However, you should always consider the effect that the complete destruction or disappearance of your vehicle might have. If you need a car to get to work, and your financial position would not allow you to purchase another vehicle, keeping your coverage could be a wise choice.

If your car is older, it may be time to drop comprehensive and collision and put the money you're saving into an account to buy a new car when your current one dies.

First, look at the cost of collision and comprehensive coverage; if the premiums and deductible amount for this portion of your car insurance policy cost more or the same as the worth of your vehicle, it's likely time to drop the coverage. For example, if your car is worth $1,000 and your coverage costs $500 a year plus a $500 deductible, you're not really getting anything for your money.

If your premiums don't quite match up to the value of your vehicle, then look at the 10 percent rule. If your premiums exceed 10 percent of your potential payout, experts say you may want to drop your physical damage coverages. Your potential payout is the value of your vehicle minus your deductible.

For example: If your car is worth $3,000 and you have a $500 deductible, your potential payout would only be $2,500 if your car was totaled and you placed a collision claim. Using the 10 percent rule, if your collision and comprehensive premiums cost $250 or more a year, it's time to consider dropping the coverage.

Assuming that you could afford to replace your car if it was severely damaged or stolen, your next step is analyzing how likely that is to occur. The average American motorist gets into an accident every 11 years. That's anything from a small dent to complete destruction. If you're 18 years old and spend your evenings trying to emulate scenes from The Fast and the Furious, or you live where car theft is rampant, you might want to keep your coverage. On the other hand, if you never exceed the speed limit, keep your car garaged and only drive on Sundays, you may be at low risk if you choose to forego the optional coverage.

Depending upon your deductible and other factors, you could consider dropping both comprehensive and collision insurance if your vehicle's value is below the amounts shown below, where the cost of insurance and deductible is equivalent to the value of your car:

State

Average monthly premium for both collision and comprehensive insurance

$500 deductible:

Consider dropping if car's value is below

$1,000 deductible:

Consider dropping if car's value is below

California

$37.23

$947.00

$1,447.00

Colorado

$33.34

$900.00

$1,400.00

Illinois

$31.97

$884.00

$1,384.00

Michigan

$42.58

$1,011.00

$1,511.00

New York

$41.11

$993.00

$1,493.00

While many insurers require their customers to buy collision and comprehensive auto insurance together, it is possible to purchase comprehensive insurance only or collision insurance only. Pricing varies by auto insurance carrier, so apply logic when deciding to purchase or forego optional insurance coverage.

Prepare yourself to make a sound decision by getting auto insurance rates specific to your situation. However, it's also an emotional decision -- you're the one who has to sleep at night.

About the author:

Gina Pogol has been writing about insurance, mortgage and finance topics since 1994. In addition to a decade in mortgage lending, she has worked as a bankruptcy paralegal, a business credit systems consultant for Experian and an accountant for Deloitte.

Source


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When it comes to paying for damage to your own vehicle, your first line of defense to recover from auto accidents is collision coverage. Many drivers are convinced they’ll never wreck their own vehicle, or that they’ll never be involved in an accident, but market research shows that the average driver in the U.S. will be involved in an accident once every ten years. Depending on your driving habits – say, if you go out late at night when drunk drivers are on the road, or if you drive and park in urban areas – you may be at higher risk. To be sure, if your vehicle is relatively new or worth more than a couple thousand dollars, you should pay to have it insured against the risk of an accident.

Three Ways Collision Coverage Serves You

Only collision coverage pays for damage you cause to your own vehicle, but contrary to popular belief, you can also use it for accidents in which you were not at fault. And really, there are three different ways collision coverage can work to your benefit if you find yourself at the wheel after an accident:

    Collision coverage pays for damage to your vehicle when YOU cause an accident.

    • If you wreck your own vehicle, your insurer will pay for the cost to repair the vehicle, or if the cost to repair is more than the value of the vehicle, they will pay to replace it based on its market value at the time of the accident.

    Collision coverage pays for damage to your vehicle when ANOTHER DRIVER causes an accident.

    • Your insurer will pay your damages and then go seek reimbursement from the other driver’s insurance.
    • Many drivers take advantage of this option when the at-fault driver’s insurer is being difficult or slow to act. You will typically have to demand your insurer take action in this scenario, but if you paid for collision coverage, you have these benefits.
    • Using this option should not raise your rates, since you were not at fault. Be sure to ask your insurance adjuster whether a scenario will or won’t affect your rates before choosing your course of action.

    Collision coverage pays for damage to your vehicle in circumstances not covered by other sections of your policy.

    • If you do not purchase comprehensive coverage for vandalism, acts of nature, theft, etc., then you can typically claim such losses under collision coverage.
    • For hit-and-run accidents or damage caused by a driver with no insurance, you can typically claim such losses under collision coverage.
    • Using collision coverage in these scenarios may raise your rates, as your insurer may assess such damage as if you were at fault or caused it yourself. This is why it’s best to carry comprehensive (COMP) and underinsured motorist (UIM) to pay for damage in any scenario.

Adding collision insurance coverage to your auto policy will of course increase the cost of your monthly premium, however the amount of increase will vary greatly from driver to driver, depending on several factors. According to the Insurance Information Institute, certain factors affect the cost of a driver’s insurance premiums. Such factors include level of education, income, age, gender, credit score, driving habits, driving history, geographical location, and the vehicle you drive. Gathering quotes from multiple insurers is the best way to know what your premiums will cost and where you might get the best deal; just make sure you’re comparing equal coverage and policy limits when getting quotes from different insurers.

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Most insurers will offer slight discounts to drivers who buy multiple forms of coverage at once, such as comprehensive, underinsured motorist, rental, and personal injury protection on their auto policy. Additional discounts may be offered for those who buy homeowners, motorcycle, boat, RV, or other forms of insurance coverage from the same insurer. Generally speaking, these can be qualified as “spend more to save more” discounts; drivers on a budget shouldn’t consider buying extra coverage as a means to save money. On the other hand, going without insurance coverage (specifically collision) will likely leave you with a large out of pocket expense in the event you wreck your vehicle.

Beyond the aforementioned benefits of collision coverage, there are a handful of very important factors to keep in mind when considering when to drop collision insurance coverage, or when collision insurance is worth it for your car.

Factors to Consider When Choosing Whether or Not to Pay For Collision Coverage

  • Your Vehicle’s Value
    • If you drive a vehicle that’s only worth a few thousand dollars or less, it might make sense to pay for any accident damage out of pocket instead of paying your insurer.
    • For expensive vehicles with values over $5,000 or $10,000, it’s a good idea to pay for collision coverage.
    • If you have a loan on your vehicle, many lenders will require you have collision coverage on your auto policy. However, some states and some lenders don’t always require collision coverage. Without collision insurance, in the event you damage or total the vehicle, you’ll be left paying the full value of a loan with no way to recoup much of the money from the vehicle, which, in its damaged state, is worth a fraction of its pre-accident value.
    • Over the course of four or five years (or less), you might end up paying your insurer more than your vehicle’s value.
  • Depreciation In Value of Your Vehicle Over Time
    • If your vehicle is worth roughly $10,000 today, you can expect that in five years it might be worth anywhere from $7,000 to $3,000, or less. You might consider dropping collision coverage in a few years if you can expect your vehicle won’t be worth more than a few thousand in that time.
  • Your Risk of An Accident
    • If you only drive your vehicle infrequently or driver fewer than a few thousand miles per year, your risk of an accident may be relatively low.
    • If you drive everyday, and if you drive and park in urban areas, you may be at higher risk of an accident.

You can do some basic math as to whether collision coverage is financially viable by following these steps:

  • Research your vehicle’s current value by searching for comparable models on craigslist, ebay motors, autotrader.com, kbb.com, nada.com, or other websites for shopping for vehicles.
  • Calculate your current rates for collision coverage or get quotes for collision coverage to know what your expected yearly premium will be.
  • If, over the course of three to five years, the total of your yearly premiums will equal or exceed your vehicle’s value, you should consider cancelling your collision coverage.
  • Instead of paying your insurer on a monthly basis for collision coverage, you should instead set aside a similar amount for an emergency vehicle fund, which you can use for emergency repairs or for maintenance.

If you have enough money in your savings account to pay for your vehicle’s value at a moment’s notice, you should consider dropping collision coverage and reap the savings while you drive without an accident. In the event you cause damage to your own car, just know that you’ve worked it into your budget to pay for it. If the damage is minimal or simply cosmetic, and your vehicle has a relatively low value, it may be worth it to simply live with the damage instead of making costly repairs.

At the end of the day, many factors should weigh into your decision as to whether to keep collision coverage on your policy or not. If you’re not absolutely sure that you could deal with paying for repairs or completely replacing your vehicle at a moment’s notice, or else going without a vehicle until you could save for a replacement, it’s best to err on the side of caution and pay the extra premium for collision coverage.

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  1. Renee says: June 17, 2014 at 5:14 am You have to throw the collected dirt from the container in the garbage can in your backyard or outside your house to prevent the dust and dirt from getting back into your house. And while they are extremely efficient machines that clean large areas in record time, they are also easy to operate for that spilled ashtray or other debris that needs to be picked up quickly. It mainly features two roller brushes that can sweep the dirt on tight spaces like upholstery, kitchen and car.

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What is collision coverage?

Collision coverage covers your insured vehicle for physical damage that your car sustains when it hits, or is hit by, another vehicle, or another object. Collision also covers the upset of your vehicle, such as the unintentionally rolling or flipping of your vehicle.

Your property damage liability coverage does not cover your vehicle in any way; it only covers those that you hit. For auto accident damages to your vehicle to be covered by your auto policy, collision coverage is needed.

Collision coverage allows you to file a claim with your car insurance company and have it pay, minus your deductible amount, for damages received in most auto accidents. Collision will pay out, according to the terms and conditions of your policy, if the other driver is uninsured, underinsured, or unknown -- or even if you are at fault.

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Collision doesn’t cover any and all damages that your vehicle may receive. To have “full coverage” on your car you would also need to carry comprehensive insurance, which covers your car if it is stolen or damaged by vandalism, flood, fire, or animals.

Keep in mind, not every issue with your vehicle is covered by collision or comprehensive insurance. For instance, damages caused by wear and tear, freezing or mechanical breakdown are not covered by either coverage -- or any other portion of an auto insurance policy.

When receiving a quote for collision coverage, you will need to choose a deductible amount. A deductible is the portion of a claim that you’re responsible for paying before your insurance coverage kicks in.

Is collision coverage mandatory?

Collision insurance is not required by any state. Most states require property damage liability so that your insurer will pay (up to your limits) if you damage other people’s vehicles or property, but states do not mandates that you carry coverage to pay for damages to your own car.

However, if you have a loan or lease on your vehicle, then your lienholder can (and usually will) require that you carry this coverage and may mandate the specific deductible amount you have to select.

If want to lower your insurance premium by raising your deductible, while your car is still financed, be sure to check with your lienholder to see if they will allow a higher deductible than what you are currently carrying.

What is the recommended deductible?

Collision coverage does not come with limits; instead, the most it will pay you is the actual cash value of your car, minus your deductible, if it is declared totaled. Experts typically recommend a $500 deductible unless you have substantial savings to tap. If you have put a minimal down payment on a car, you should consider gap insurance.

Typically, the range you can choose for your collision deductible is anywhere from $100 to $2,500 (deductible choices vary according to state laws and insurance company guidelines). Most car owners choose a deductible of between $250 and $1,000.

In general, the higher the deductible the less expensive your premium and the lower your deductible the higher your collision premium – since the insurer is taking on more risk. So, a higher deductible can substantially lower the cost of insurance premiums, but you’ll have more to pay out-of-pocket before your collision benefits kick in.

When picking a deductible amount, find the right balance for your finances. For example, if you set your deductible at $1,000 and your car sustains damages totaling $1,500, you will pay $1,000 and your insurance company will pay $500. Deductibles are due per incident, so you will have your deductible amount due each time a collision claim is made. If you raise your car insurance deductible to lower your rates, you can save, on average, about 10 percent, but in some cases it can be much more.

How much does collision coverage cost?

Average price of collision coverage by state for 2013

State Collision
National average $297
Alabama $292
Alaska $361
Arizona $255
Arkansas $302
California $361
Colorado $255
Connecticut $347
Delaware $292
D.C. $452
Florida $242
Georgia $313
Hawaii $292
Idaho $203
Illinois $278
Indiana $229
Iowa $205
Kansas $247
Kentucky $254
Louisiana $380
Maine $246
Maryland $328
Massachusetts $361
Michigan $377
Minnesota $210
Mississippi $299
Missouri $257
Montana $257
Nebraska $221
Nevada $285
New Hampshire $279
New Jersey $364
New Mexico $262
New York $355
North Carolina $263
North Dakota $228
Ohio $251
Oklahoma $290
Oregon $207
Pennsylvania $301
Rhode Island $372
South Carolina $243
South Dakota $201
Tennessee $292
Texas $357
Utah $248
Vermont $272
Virginia $264
Washington $244
West Virginia $319
Wisconsin $208
Wyoming $260

Source: © 2016 National Association of Insurance Commissioners (NAIC).

What happens if I don’t have collision coverage?

Without collision coverage, you may be left to pay out of your own pocket for your car’s repairs unless there is someone else found liable for the damages, such as an at-fault driver who has property damage liability coverage with which you can make a claim through. Or if you are hit by an uninsured motorist and have uninsured motorist property damage (UMPD) coverage under which you can make a claim.

With a newer, high valued car, you will normally want this added protection for your vehicle, whether you have financed it or not. Without collision coverage, you could end up in a situation where you would not need to pay for repairs, but instead need to replace your car due to it being totaled out, and that’s a lot of money to be out for even a moderate valued vehicle.

If you have an older car with a low value (without a lease or loan on it), you may not want to pay for collision coverage since if your car is damaged, or totaled, the low amount of compensation you’d receive from your auto insurance company may not be worth the premium paid out.

Knowing how much your vehicle is worth can certainly help you determine if collision coverage is worth the price. Find out the current value of your car by using appraisal tools offered on sites such as Kelley Blue Book (KBB), NADAguides, and Edmunds.

Will collision cover a dent if I repair it myself?

If a collision claim is filed on some light body damage to your car, it's perfectly acceptable to fix it yourself and have the insurance company pay you directly. The only exception may be if your policy specifically states you must use preferred body shops, but that is rare and only legal in some states. When dealing with your insurance company, explain that you will fix the damage yourself and that you want the money paid to you. It is strongly recommended that you only do this for light dents; if there is any frame damage, take the car to a body shop.

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