Car insurance is important for protecting car owners from financial problems that could happen. Collision insurance is one of the different types of insurance that protects you financially in case of an accident.
This piece talks about collision insurance and what it covers. It also talks about why it’s important and what its benefits are.
By learning about accident insurance, you can get important information that will help you pick the best car insurance.
What does collision insurance cover in a car insurance policy?
This kind of car insurance helps pay to fix or replace your car if it gets damaged in an accident with something else, like another car. It also pays for damage from flipping over. In most states, collision insurance isn’t needed, but lenders will make you get it if you finance or lease your car.
Collision insurance is not needed by law, but most lenders will make you get it if you finance or lease your car. It’s up to you if you want to buy collision insurance if you own your car fully.
What is covered by collision insurance?
Insurance for accidents covers a lot of different types of damage, such as:
- Damage to your car from a crash with another car
- The damage your car gets when it hits something, like a tree or telephone pole
- You hit a rock and hurt your car.
- Rolling over can damage your car.
What is not covered by collision insurance?
Collision insurance doesn’t cover all kinds of damage to your car. For example, this is what accident insurance doesn’t cover:
- Theft or violence that damages your car
- Accidental damage to your car from things like storms, hurricanes, or earthquakes
- Wear and tear on your car’s parts that leads to damage
Insurance for crashes doesn’t cover damage from things other than collisions, like theft, vandalism, or bad weather. That kind of security comes from having full coverage insurance.
How does collision insurance work?
If you have collision insurance, you will tell your insurance company about the crash. Then, your insurance company will look into the claim and tell you if it’s covered. If the claim is accepted, your insurance company will pay to fix or replace your car, minus the amount you have to pay out of pocket.
Before your insurance company pays, you have to pay a certain amount of money. This is called your deductible. It’s possible to deduct anywhere from a few hundred dollars to a few thousand dollars. Your monthly payment will be less if you raise your deductible.
For instance, if you have a $500 deductible and your car gets damaged in an accident, you will have to pay the first $500 to fix it. After that, your insurance company will pay for the rest of the fixes, up to how much your car is worth in cash.
How much does collision insurance cost?
The price of accident insurance depends on many things, such as your location, age, driving record, and the type and make of car you own. Accident insurance can range anywhere from $100 to $1,000 a year.
Rates for accident insurance are affected by several things, such as:
- Age: Younger drivers usually have to pay more for accident insurance than older drivers. The reason for this is that young drivers are more likely to wreck.
- Driving record: People who have never been in an accident usually pay less for car insurance than people who have a history of accidents. A driver with a good driving record is less likely to make a claim, so this is the case.
- Type and model of car: It costs more to cover some cars than others. For this reason, some cars are more likely to be stolen or cost more to fix.
- Location: People who live in places where accidents and theft happen a lot usually have to pay more for damage insurance.
- Deductible: Your monthly premium will be less if your deductible is bigger. However, if you get into an accident, you will have to pay more out of pocket.
Example:
Suppose you are a man in your 30s who has never been in an accident. You drive a 2023 Toyota Camry and live in a big city. Collision insurance costs about $700 a year.
But if you are a 16-year-old male driver with a bad driving record, live in the country, and drive a 2023 Chevrolet Camaro, you can expect to pay more than $1,000 a year for accident insurance.
Getting quotes from more than one insurance company is the best way to get a good idea of how much accident insurance costs.
A collision insurance tool can give you a rough idea of how much collision insurance would cost you based on your specific needs.
To get your accident insurance rates down, try these things:
- You should get better at driving. Your car insurance rates will go down the most if you do this. Stay away from tickets and car crashes.
- Pick a car that is safe. Insurance costs tend to be lower for cars that have safety features like airbags, anti-lock brakes, and stability control.
- Your deductible should go up. Your monthly payment will be less if you raise your deductible. But make sure that the deductible you pick is one that you can pay for yourself if you get into an accident.
- Get quotes from more than one insurance company and compare them. This is the best way to get accident insurance at the best rate.
These tips will help you get better deals on car insurance:
- Pick a deductible that is bigger. Your monthly payment will be less if you raise your deductible. However, if you get into an accident, you will have to pay more out of pocket.
- Use discounts to your benefit. A lot of insurance companies will lower your rate if you have a clean driving record, take basic driving classes, or add safety features to your car.
- Put your plans together. A lot of insurance companies will give you a discount if you buy more than one policy from them, like home and car insurance.
In the end, getting quotes from more than one insurance company is the best way to save money on accident insurance.
Do you need collision insurance?
Depending on your situation, you may or may not need accident insurance. This is something you might want to think about if you have a brand-new or very valuable car. If you have a history of accidents or live in an area with a lot of them, collision insurance might also be a good idea.
On the other hand, you might not need accident insurance if your car is old and not worth much. Collision insurance costs a lot, and if you don’t think you’ll have an accident, it might not be worth it.
How to decide if you need collision insurance
Talk to your insurance agent if you’re not sure if you need accident insurance. They can help you figure out what kind of coverage you need and how much risk you are willing to take.
Here are some things you should think about to decide if you need accident insurance:
- How much your car is worth: If you have an old or cheap car, the cost of fixing it or getting a new one might be less than the cost of your accident insurance. If this is the case, you might want to drop accident insurance.
- Your driving record: You might want to drop collision insurance if you have a clean record and don’t think you’ll get into an accident.
- If you could pay for your car’s repairs or replacement out of your own cash if it were totaled in an accident, chances are you don’t need collision insurance. Damage insurance might be a good idea if you can’t pay for the fixes or replacements yourself.
Such as:
Let’s say you own a $10,000 car that is 5 years old. You’ve never been in an accident before, so you should be fine. If your car was totaled in a crash, you could also pay to fix it or get a new one that you own. If this is the case, you might want to drop accident insurance.
If, on the other hand, you have a $50,000, one-year-old car that you couldn’t afford to fix or replace yourself if it were destroyed in an accident, then coverage may be a good idea.
In the end, it’s up to each person to decide if they want to buy accident insurance or not. Before you decide, you should see how much accident insurance costs, how likely it is that your car will get damaged, and how much money you have.
Difference between collision and comprehensive coverage?
Both collision and comprehensive coverage can cover damage to your car, but they do so in different ways.
No matter who was at fault, accident coverage will pay for damage to your car that happens when it hits something or another car. Damage from accidents with other cars, trees, telephone lines, and other inanimate things is one example of this. Potholes can also cause damage, but collision insurance will pay for it.
Full (comprehensive) coverage pays for damage to your car that isn’t caused by an accident, like damage from theft, crime, fire, or natural disasters. It can also cover damage done by animals like birds or deer.
You don’t have to have accident or comprehensive coverage, but most lenders will make you if you finance or lease your car. You can choose whether to get collision and full coverage if you own your car outright.
How to File a Claim for Collision Insurance
To file a claim for accident insurance, you will need to call your insurance company and give them the following details:
- Your name and contact information
- Your policy number
- The date and time of the accident
- The location of the accident
- A brief description of the accident
- The name and contact information of the other driver(s) involved in the accident
- The make, model, and year of your car
- The damage to your car
You may also need to provide your insurance company with the following documentation:
- A police report (if one was filed)
- Photos of the damage to your car
- Estimates for repairs to your car
After you give your insurance company all the information they need, they will put your claim in the hands of an assessor. The assessor will look into what happened and tell you how much your insurance company will pay to fix or replace your car.
Here are some tips on how to file a claim for accident insurance:
- When giving your insurance company details, be honest and get it right.
- As soon as possible after the accident, file your claim.
- Make sure you keep a copy of everything that has to do with your claim.
- Allow your insurance agent time to do their job and be helpful.
You should call your insurance company if you have any questions about how to file a claim for accident insurance. They can explain the process to you and make sure you file your claim properly.
What You Need to Know About Deductibles
You have to pay a deductible before your insurance company will pay for fixes. For instance, if you have a $500 deductible and your car gets damaged in an accident, you will have to pay the first $500 to fix it. After that, your insurance company will pay for the rest of the fixes, up to how much your car is worth in cash.
Your collision insurance rate will depend on how much of a deductible you have. Your premium will be less if you have a bigger deductible. However, if you get into an accident, you will have to pay more out of pocket.
It’s important to think about your budget and the value of your car when picking a collision insurance amount. It might be smart to choose a bigger deductible if you can pay for the repairs or replacement of your car out of your own pocket if it gets totaled in an accident. Your rates may go down because of this. That being said, you might want to pick a smaller deductible if you can’t pay for your car’s repairs or replacement out of your own pocket. The amount of money you have to pay out of pocket if you get into an accident will go down.
Why deductibles are used
These are some of the reasons why insurance companies use deductibles:
- To get customers to be more careful so that claims and accidents don’t happen.
- So that insurance companies don’t have to pay out as many small claims.
- To lower the cost of insurance for people who have it.
How deductibles work
You will have to pay your deductible before you can file a claim with your insurance company. Your insurance company will pay the rest of the claim, up to the limits of your policy, after you pay your deductible.
One example is that if your car insurance has a $500 deductible and you cause an accident that costs $1,000 to fix, you will have to pay the first $500 to fix it. After that, your insurance company will pay the last $500 to fix the damage.
In Conclusion
Having collision insurance on your car can give you peace of mind that it will be taken care of financially if something happens. Before you decide to buy accident insurance, you should think about how much it costs and how likely it is that your car will get damaged.
FAQs
To wrap up, let’s talk about some frequently asked questions about car insurance:
At what point does accident insurance have to be bought?
It’s not needed by law to have collision insurance, but there are times when you really need it. To give you some examples:
- You have a brand-new or very expensive car. Collision insurance can help you pay for repairs or a new car if yours gets ruined in an accident.
- You have a loan or lease on a car. Most lenders and lease companies make borrowers and lessees get collision insurance.
- There are a lot of crashes where you live. If you think you might be in an accident more often, collision insurance can protect your finances.
- According to your job, you have to drive a lot. In the event of an accident, collision insurance can help you protect your job if you drive a lot for work.
If you don’t fit any of the above descriptions, you might still want to think about getting accident insurance. Having collision insurance on your car can give you peace of mind that it will be taken care of financially if something happens.
Is it possible to get accident insurance without liability insurance?
You can have crash insurance even if you don’t have liability insurance. It’s important to remember, though, that collision insurance only pays for damage to your own car if you get into a crash. Liability insurance, on the other hand, pays for injuries to other people and damage to their property or cars if you are at fault in an accident.
Most states make it a law that you have liability insurance. You don’t have to have collision insurance, but people who drive new or expensive cars or who live in places with a lot of accidents should.
There are risks that you should think about before you decide to drop your liability insurance to save money on your premiums. You could be held directly responsible for the costs of damage to other people’s cars and property as well as their injuries if you are found to be at fault in an accident. This could ruin their finances.
For those who are tight on cash, there are ways to lower their liability insurance costs without getting rid of it completely. You can, for instance, raise your deductible, get quotes from more than one insurance company, and use any savings that are out there.
Is collision insurance needed for cars that are leased?
As a general rule, rented cars need collision insurance. This is because the company that leased the car owns it and wants to keep it safe. If the leased car gets damaged in an accident, collision insurance will pay to fix it or replace it, no matter who is at blame.
In addition to collision insurance, leasing companies usually need complete insurance as well. Full coverage insurance covers damage to the leased car that isn’t caused by an accident, like damage from theft, crime, or natural disasters.
If you don’t have collision insurance and your hired car gets damaged in an accident, you will have to pay to fix it or get a new one. This could put a big strain on your finances, especially if the car is destroyed.
If another driver is at fault in a crash, what do I do?
If someone else was driving recklessly and caused the accident, their insurance company will pay for the repairs to your car, your hospital bills, and any other losses you had because of the accident.
Following these steps is what you should do after a car accident:
- Look for hurt people. Call 911 right away if you or someone else is hurt.
- Share your information with the other driver(s) who were in the crash. This has your name, address, phone number, details about your insurance, and license plate number.
- Report it to the cops. Even if the accident is small, this is a very important step. The police report will describe the crash in detail, and your insurance company will use it to figure out who was at fault.
- Picture the damage to your car. Your insurance company will use this to figure out how much to pay to fix the damage.
- To make a claim, call your insurance company. Make sure you give them all the information you have about the accident, such as the police report and pictures of your car’s damage.
Your insurance company will put an adjuster in charge of your case once you’ve made a claim. The insurer will look into what happened and figure out who was at fault. If it turns out that the other driver was at blame, their insurance company will pay for your damages.
Does collision insurance cover crashes where someone hits and runs?
Yes, hit-and-run events are usually covered by collision insurance. It’s called a “hit-and-run” accident when the driver who caused the accident doesn’t give their contact information after the accident.
When it comes to normal maintenance or wear and tear, can I use my collision insurance?
Accident insurance does not cover normal upkeep or normal wear and tear. Collision insurance is meant to pay for damage to your car that happens when it hits something or another car, no matter who is at fault. There is damage from accidents with other cars, trees, telephone lines, and other inanimate things.
What if my car hits a wild animal? Does that get paid for by car insurance?
Yes, accident insurance will usually pay for damage to your car that happens when you hit an animal.
If you hit an animal and want to make a collision insurance claim, you will need to give your insurance company the following information:
- When and where the accident happened
- Where the accident took place
- A short account of the accident
- Type, year, and make of your car
- The harm done to your car
- What kind of animal you hit
Are there any limits on where I can get my car fixed if I have accident insurance?
If you have accident insurance, you can usually pick where to get your car fixed. But some insurance companies may put limits on where you can get your car fixed so that they can keep costs down and make sure the work is done well. In this case, your insurance company might make you go to a service shop that is in their preferred provider network (PPO).
If you go to a repair shop that isn’t in the PPO network of your insurance company, you might have to pay more if you need to. Also, it might take longer for your car to be fixed because your insurance company might need to get permission from someone else before they let the fixes happen.
Before you get your car fixed, you should call your insurance company to see if there are any rules about where you can take it. Usually, you can find this information in your contract or by calling your insurance agent.
If I change my mind, can I change my deductible?
Yes, most of the time you can change your deductible when you renew your insurance. Remember that changing your deductible could have an effect on your rate, so it’s important to think about how much it will cost before you make a change.
Does accident insurance cover things that are inside the car?
No, accident insurance usually doesn’t cover things inside the car that belong to you. To get that coverage, you’d need either comprehensive insurance or a separate policy for your personal items.
Can I get accident coverage for an old car?
Most people with newer, higher-value cars have collision insurance. But you can still get it for an older car if you think it’s worth the extra money. Think about how much the car is worth and how much money you have to make a smart choice.