Collision Coverage
Auto insurance that pays to repair or replace your vehicle after a collision, regardless of fault.
Collision coverage pays to repair or replace your own vehicle after it collides with another vehicle or a fixed object (guardrail, tree, pole) regardless of who is at fault. It applies whether you rear-ended someone else, were hit by another driver, or single-car accident. Collision is an optional coverage (lenders require it on financed vehicles) and is subject to your deductible.
Collision coverage pays the lesser of the repair cost or the actual cash value of the vehicle. If your vehicle is totaled (repair cost exceeds ACV), you receive the ACV minus your deductible. For older vehicles with low market value, collision coverage may not be cost-effective: if the car is worth $4,000 and you have a $1,000 deductible, the maximum you can recover is $3,000—compare that to several years of additional premiums.
A rule of thumb: consider dropping collision when the annual premium plus deductible exceeds 10% of the vehicle's current market value. Always check the actual value using resources like Kelley Blue Book or NADA before making this decision.
Real-World Example
After hitting a guardrail in a snowstorm, the driver filed a collision claim and received $8,500 to repair her SUV, minus her $500 deductible.