November 28, 2021

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What is collision insurance, and do you need it?

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Collision insurance is a type of car insurance that pays for damages to your own vehicle after an accident with another vehicle. While not required by state law, you may be required to purchase a collision insurance policy if you are leasing your vehicle or owe car payments. In this article, we’ll provide a full explanation of collision car insurance and take a look at average costs.

If you’re shopping for collision insurance, be sure to compare offers from some of the best car insurance companies in the country. By getting multiple quotes, you can make sure you choose the lowest rates for your collision coverage. You can start comparing free quotes quickly and easily using the tool below.

In this article:

  • What does collision insurance cover?
  • How much does collision car insurance cost?
  • Do you need collision insurance?
  • Our recommendations for collision insurance
  • Our methodology
What does collision insurance cover?

Collision insurance pays to repair or replace your vehicle parts if they are damaged in an accident. Typically, this accident has to occur while the car is moving. Accidents covered by collision insurance include:

  • Accidents involving another vehicle
  • Collisions with a tree, fence or guardrail
  • Vehicle flipping
  • Damage caused by road hazards such as potholes

If you’re involved in a covered accident, your collision car insurance policy will pay for the cost of damages, and all you’ll pay out of pocket is your predetermined deductible amount. Collision insurance policies have a maximum payout limit, which is usually the actual cash value (ACV) of your vehicle, or what the vehicle is worth.

What doesn’t collision insurance cover?

Collision insurance does not cover damage that is caused by weather or an animal. Any damage your car sustains while parked is also not covered. Examples of what collision insurance does not cover include:

  • Hail, fire or flood damage
  • Collisions with a deer or other large animal
  • Medical expenses for any accident
  • Damage to another person’s property
  • Theft or vandalism damage

To cover your own medical expenses, you will need a medical payments (MedPay) or personal injury protection (PIP) policy. If you want your car to be covered in the event of theft or weather damage, you’ll need to purchase a comprehensive insurance policy. Damage to another driver’s vehicle is covered by liability car insurance.

How much does collision car insurance cost?

According to data collected by the National Association of Insurance Commissioners (NAIC), in 2017, the average annual cost of collision insurance in the U.S. was $363.08. However, average premiums varied widely by state. The cheapest state for collision insurance that year was South Dakota, where drivers paid an average premium of $236.35. The most expensive area was Washington, D.C., where drivers paid $497.81 on average.

The cost of any insurance policy varies not only from state to state, but also from driver to driver. Personal details such as your age, gender, marital status and driving record factor into the cost of an auto policy, as do details about the vehicle you drive and where you live within your state. You can reduce your costs by setting lower policy limits or a higher deductible.

Do you need collision insurance?

You are not required by law to maintain a collision insurance policy in any state. However, your lender may require that you purchase a collision policy if your vehicle is leased or you still owe car payments.

Although you may not be required to maintain a collision insurance policy, it can still be a good idea. A collision insurance policy can protect you from a costly repair or replacement after an accident. If you are involved in an accident where the other driver is at fault, that driver’s policy may not cover the full cost of damages to your vehicle, and your collision policy can pay the remainder of your bills.

Should you get into an accident and are found to be at fault, your liability insurance policy will only cover damages to the other driver’s vehicle—not your own. This means you’ll have to pay the entire cost of your own car repairs out of pocket unless you have collision insurance.

If you have an old car or the value of your car is low, it may not be worth it to purchase collision insurance. When trying to decide if a collision insurance policy is right for you, estimate the value of your vehicle and subtract your deductible. That amount is the most value you can expect to get from a collision insurance policy. Compare this against your collision insurance premium to determine whether collision insurance is worth it for you.

Our recommendations for collision insurance

The best way to find the right collision insurance policy for your needs is to compare providers. While it’s important to consider cost, you also want to be sure to pick an insurer with strong financials and a record of meeting customer claim obligations. Compare free, personalized collision car insurance quotes using the tool below, and be sure to consider two of our top-rated providers: Geico and Progressive.

Geico: 9.1 out of 10.0

In our review of the best car insurance providers, Geico came out on top. The insurer has a reputation for excellent customer service, which is reflected in its consistent, above-average ratings in the J.D. Power 2020 U.S. Auto Insurance Satisfaction StudySM.

Geico is also known for its low prices. In some states, it has the lowest average rates of any provider. This may be because of its many money-saving opportunities, including a good driver discount (up to 26%), good student discount (up to 15%) and a multivehicle discount (up to 25%). Geico is available across the U.S. and offers every standard type of auto insurance — liability, collision, comprehensive, medical payments, personal injury protection and uninsured motorist coverage.

Progressive: 9.0 out of 10.0

Based on our industry research, Progressive is a great choice for high-risk drivers, including drivers under the age of 21 and those who have a DUI/DWI on their driving record. In many cases, Progressive offers the cheapest auto insurance rates for such policyholders.

But competitive rates and a wide range of discounts aren’t the only reason to consider Progressive. The insurer holds an A+ financial strength rating from AM Best, which means it has a strong ability to pay out customer claims. The usage-based Snapshot program tracks your driving habits and awards discounts for safe driving. According to Progressive, customers save $145 a year on average using this program.

Progressive offers full coverage insurance policies as well as loan/lease payoff coverage, custom parts coverage and ride-share coverage.

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation: Our research team considered market share, ratings from industry experts and years in business when giving this score.
  • Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
  • Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
  • Cost: Average auto insurance rates and discount opportunities were both taken into consideration.
  • Customer Experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
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