You may have collision coverage, an optional insurance that pays for damage to your car resulting from a collision with another vehicle or an object.
Collision is a no-fault coverage. It applies even if you were 100% responsible for causing an accident.
These are some examples of situations covered by collision insurance . . .
- You collide with another vehicle.
- You run off the road and hit a tree, a telephone pole or something else.
- You damage the underbody of your vehicle by driving into a large pothole.
- You swerve to avoid another car and your vehicle overturns.
- A shopping cart hits your vehicle. (But see the discussion of “deductibles” below.)
(At the risk of confusing you, collisions with animals, such as a deer, are normally not covered by collision coverage. But they are covered by your “comprehensive coverage.”)
Collision Insurance Deductibles
Collision coverage always includes a deductible amount that you must pay before the insurance coverage kicks in.
Deductibles normally range from $0 to $1,000. The higher the deductible, the lower your collision insurance premium.
Before choosing a higher deductible, think carefully about whether you will be able to pay the deductible amount if you have an accident.
If another driver caused your accident and you had your car repaired under your collision coverage, you can recover your deductible from the at-fault driver’s insurance company.
In fact, your insurance company will try to get your deductible back for you as part of its effort to recoup the amount it paid for your collision claim.
How Does Collision Insurance Coverage Work
The Accident Was Your Fault
If your car is damaged in an accident which was your fault, you can get your car damage repaired (or, it was totaled, you can recover your car’s actual cash value) under your collision coverage, if you have it. Of course, you can only recover up to your policy limit.
You will have to pay a deductible, but your insurance company will pay the balance of the repair costs.
The Accident Was Someone Else’s Fault
If someone else caused your accident, you have a choice.
You can have your car repaired by the at-fault driver’s insurance company under that driver’s property damage liability insurance.
Or, you can have your car repaired by your insurance company under your collision insurance coverage.
Naturally, you are only entitled to one recovery. You cannot recover the same damages from both insurance companies.
Should You Use Your Insurance Or The Other Guy’s To Have Your Car Repaired
And if you don’t have collision coverage, you don’t have a choice.
But, if you have a choice which insurance to use, yours or the other guy’s . . .
Normally, you should have your car repairs done (or the value of your totaled car paid) by the at-fault driver’s insurance company.
Why? Because there is no deductible.
But there are some circumstances where you might want to have your car repaired under your collision coverage, even if another driver caused your accident and even though it means you will have to pay a deductible . . .
- The at-fault driver’s insurance company denies liability.
- The at-fault driver’s insurance company is dragging its feet. Since they only have to pay if their driver is liable, they are entitled to investigate the accident to determine fault. This might take more time than you want to wait to have your car repaired.
- You don’t want to discuss liability with the at-fault driver’s insurance company yet. You are investigating too and you don’t want to say anything that might harm your fault claim down the road. In this instance, go to your insurance company and have your vehicle repaired under your no-fault collision coverage.
- Your car is a total loss and your insurance company assess the value of your destroyed car higher than the at-fault driver’s insurance company. Obviously, you would go with the higher amount.
But, before pulling the trigger on your decision to use your collision coverage instead of the at-fault driver’s liability coverage, consider these disadvantages. . .
- Your collision coverage has a limit. If your collision coverage policy limit is less than the cost of the repair, you would have to pay the balance of the repairs.
- There may be restrictions under your collision coverage on such things as how much you can collect for items in your car that were damaged like clothing, luggage and electronics. There are no limits when you are dealing with the at-fault driver’s insurance company.
- There will be a limit on the amount that your insurance company will pay for a rental car, and on the duration they will pay. There are no such limits when you are dealing with the at-fault driver’s insurance company.
- Most importantly, there will be a deductible that you will have to pay.
Can You Get Your Deductible Back
If your insurance company pays to repair your vehicle under your collision coverage, your company has the right to get its money back from the at-fault driver’s insurance company.
Their right is called subrogation. Basically, they stand in your place and make your claim for property damage against the at-fault driver’s insurance company.
Normally, this subrogation takes place between the insurance companies and you are not aware of it.
But what about your deductible? Does your insurance company try to recover your deductible, as well as the amount they paid to repair your car.
Yes, they do. And if they are successful, they will pay you the deductible amount you paid. This process normally takes up to a few months.
Reasons To Have Collision Insurance Coverage
You may think you don’t need collision coverage.
After all, you are a very careful driver. If you are ever in an accident, it will be because someone else caused the crash and you will be able to make a claim against the at-fault driver to get your vehicle repaired.
Whether you should buy collision coverage is a reasonable question to ask yourself, especially considering that collision insurance is usually the priciest coverage you have.
Only you can decide whether to get this optional coverage, but these are the main reasons why you might need collision coverage:
- Even though you are a very careful driver, you may still cause an accident. It only takes a momentary lapse in attention – to glance down at the buttons on your car radio or to speak to your kids in the back seat – to cause an accident.
- The at-fault driver may not have insurance. Although liability insurance is required by every state, there are many uninsured motorists on the highways. (And, in case you are wondering, your uninsured motorists coverage may not cover property damage.)
- There may be a delay determining fault in an accident. If you don’t have collision coverage, you must wait until the other driver’s insurance company decides that issue. If they disagree that their driver caused the accident, it could take you months to prove otherwise, either to them or in court. In the meantime, you would have to pay for the repairs.
- Many companies extend their collision coverage to rental cars (provided they are not being used for business). If you are covered, you can turn down the costly collision damage waiver that car-rental agents sell.
More Collision Insurance Coverage Facts For Those Who Decide To Buy It
As I have already said, collision coverage is usually the most expensive part of your insurance premium.
The amount of collision coverage your policy provides, and its cost, will depend on your car and its value. Premiums are much higher for vehicles that are expensive, accident-prone, easily damaged, frequently stolen or hard to repair. Those that score well for safety and durability often cost much less to insure.
You will have to speak to insurance companies to learn the specific cost in your case.
If your car is totaled, your collision insurance pays its actual cash value, which factors in depreciation. Your collision coverage does not pay what it will cost to replace your vehicle.
For an extra premium, some insurers will offer replacement-cost coverage for new or recent-vintage cars under the collision (and/or comprehensive) part of a policy. This coverage provides for the full cost of replacing a new or similar car — not just its cash value before the accident — as long as the insurer agrees that the car is not repairable.
Reasons To Not Have Collision Insurance Coverage
On the other hand, there may be a time that it makes sense to eliminate your collision coverage.
If your car is old and worth close to or less than your deductible, collision coverage may not make sense. You will be paying for little or no coverage.
To make this decision, do these things:
- Determine the value of your car by consulting such resources as N.A.D.A. Guides, Kelley Blue Book and Black Book.
- Find out the amounts of the deductibles and the cost for each.
- Then, make the decision that makes the most sense to you.