So what is collision insurance anyway? The US Department of Insurance defines it like this: “A policy insures against damage to properties that are insured. For example, a house is insured to the value of the house. If you were to damage the house, the policy would pay for the repair and replacement of the property.” But let’s be honest, that definition is confusing when we’re talking about cars. Here’s a clearer one from the same department: “A policy insures against damage to properties that are generally covered when you are in an accident. What is general coverage? General auto insurance covers damage to automobiles that don’t involve a collision.”
I know what you’re thinking, that second definition doesn’t make much sense either. Here’s what collision insurance actually means in plain English: it covers damage when you hit something that doesn’t move. You slam into a tree? Covered. You back into a stop sign? Covered. You slide off the road and hit a guardrail? Also covered. But here’s the catch: if you hit something that moves, like another car, truck, or motorcycle, that’s where things get more complicated.
Insurance companies put objects into different categories. “Fixed” objects include things like trees, poles, buildings, and road signs. “Movable” objects are things like farm equipment or livestock (yes, if you hit someone’s cow, that’s a thing). Then there’s “unattachable” items, which basically means anything with its own structure like furniture or statues. Oddly enough, motorized wheelchairs don’t fit into this last category.
Here’s where collision coverage actually starts making sense. When you hit another vehicle, collision coverage pays for damage to YOUR car from that crash. So if you hit a deer, you’re responsible for your own car’s damage because it was a collision between your vehicle and the deer. The deer obviously doesn’t have insurance, so your collision coverage kicks in to fix your car.
Several things affect how much your collision coverage costs. The make and model of your car matters a lot. A brand new BMW costs way more to fix than a 10-year-old Honda Civic. The type of vehicle also plays a role. Trucks typically cost more to insure than small cars because parts and repairs are more expensive. I’d recommend getting quotes from different insurance companies because their collision coverage values can vary quite a bit.
Your deductible choice has a huge impact on your premium. Pick a higher deductible, and your monthly payment drops. If you choose a $200 deductible, you might pay twice as much in premiums compared to a $500 or $1,000 deductible. But here’s the trade-off: if you only pay $15 a month because you have a really high deductible, you’ll shell out much more when you actually need to use the coverage. To learn about the difference between comprehensive vs collision insurance, check out Joywallet’s article.
Your driving record matters more than you might think. Lots of speeding tickets or accidents on your record? Expect to pay more. Traffic violations and other infractions also bump up your rates. Insurance companies use this information to figure out if you’re likely to file a claim. If they think you’re risky to insure, they’ll charge you more. Keep your driving record clean if you want to save money on car insurance.
Collision insurance does more than just cover crash damage. It also pays for repairs to your car after an accident. If your car gets damaged in a collision and you have medical bills too, your collision coverage handles the vehicle repairs while other parts of your policy (like your uninsured motorist coverage) might help with other expenses. It’s all about how the different pieces of your insurance policy work together.
