Page Contents
What does collision car insurance cover?
For a quick answer, Collision car insurance coverage is one of the major insurance coverages drivers need to protect their own cars in case of a road traffic car accident. But why do you need car insurance? is it worth it or its a waste of money?
Car accidents in the USA today
According to data I was able to access, there were more than 38,824 people in the USA that died due to car accidents in 2020. The same source reports that 36,355 people in the USA died from motor vehicle crashes in 2019. In May 2022, there were 3,890 deaths due to car accidents. Those are quite big numbers, right?
The sad news is that, though we see big figures for deaths from automobile accidents, remember the number of bodily injuries should be even higher, without forgetting the financial losses incurred through the processes.
How much does car damage repair cost?
Car insurance guards against financial losses from totaled cars, huge car repair costs, and medical bills. According to automotive fleet.com, the average vehicle repair cost in the USA is $3,053 and these estimates could be even higher in this current economic crisis.
Auto body repair costs range from fixing small scratches or dents to replacing car parts. Depending on the damages caused, your car body repair costs bills could range from $50 to more than $2500
Personal injury settlement amounts examples
If you do not carry insurance, you could be sued for larger amounts of money due to damages done to other cars, or medical bills due to bodily injuries you are at fault for. According to Miller & Zois law firm, the average settlement amount for a personal injury due to a car accident in the united states is $19,000. Think about a situation if you injured a couple of people, and also you damaged people’s vehicles. I guess you could be asked to pay millions of dollars from just a single car wreck.
To avoid paying huge compensation amounts, buying car insurance coverage is the only way to go. Possible insurance coverages you may need include collision coverage, comprehensive coverage, liability also known as the third party, uninsured/underinsured motorists, and other additional policies depending on your car insurance needs.
What is collision insurance?
All of us are at risk of getting involved in auto crashes while enjoying our automobiles. In any car accident, you will either be deemed at fault or not. Whether you are the at-fault driver or not, it is safer you carry insurance coverage.
You need car insurance to;
- protect your car
- protect your properties and savings/earnings
- protect your life
- protection of others’ properties
- And protect other people’s lives.
Carrying car insurance coverage demonstrates a financial responsibility to self and others. This is is the main reason why it is illegal to drive your car while uninsured.
If you are involved in any car crash, collision car insurance is the policy that protects your car irrespective being the fault driver or not. This policy carries a deductible that you will be obligated to pay before your insurance company pays the rest amount towards the losses suffered.
On another note, collision insurance pays the actual cash value less by depreciation and other average tear and wears. The actual cash value is the amount of money you would have received if you decided to sell off your car just before the car accident.
What damage does car insurance not cover?
As already mentioned there are standard car insurance coverages such as collision, liability, and comprehensive insurance policies. Apart from those mentioned 3, there are additional policies you can buy depending on your needs.
For instance, insurance needs for an expensive car are different from those for cheaper or old cars. If you leased or you are financing your car, then there are additional coverages your dealership or bank will ask you to buy. Any insurance policy covers specific events as mentioned on your policy form.
An example, collision coverage does not cover the vehicle you damaged or injuries you caused to passengers in the other vehicle. Also, liability coverage is useless if your car is stolen, or damaged by a hurricane or earthquake. You should ask your insurance broker or company for a proper interpretation of your policy and compare what you are told to your personal needs.
Does car insurance cover add accessories?
Let’s say you buy a nice DVD player, a new music system and other equipment. Are they covered by your auto insurance? The answer is no. Standard car insurance does not cover anything classified as personal items. You will need to buy additional coverage called special equipment coverage.
Does car insurance cover commercial use?
If you drive your personal car for business purposes and you get involved in an accident, your standard car insurance will not cover you. Your car insurance also does not cover you if you drive your car for fares. Driving your car for business purposes will require you to buy commercial vehicle insurance coverage.
Does car insurance cover General Maintenance?
Natural car damages or cars tear and wear are not covered by standard car insurance. You the owner of the car will be responsible for all the routine car maintenance. Insurance only covers specified insurable risks like theft, damages due to accidents, etc.
Does insurance cover Driving a Different Car?
The answer is a yes and no. Insurance policies follow the car but not the driver. If you are listed among the drivers, then yes you can drive it even if you do not own it. If you have fully comprehensive car insurance on your car, you can also be covered for other cars but make sure it is stated in your policy. You can also drive another car you carry a non-owners clause in your policy.
It is a wise decision to ask your company or insurance broker because policies are underwritten differently from company to company.
Does insurance cover Excluded Drivers?
Sometimes excluding certain drivers from your policy reduces insurance rates for instance drivers with DUI, previous traffic tickets, and others. Including a certain driver with a DUI on his records dramatically raises your rates. If such excluded driver gets into an accident while driving your car, then your standard insurance coverage will not compensate you.
Does insurance cover Rental Car Reimbursement?
Assume you need a temporary car as you get yours repaired in the body shop after an accident. Will your standard auto insurance cover your car rental? well, some policies cover rental reimbursement while others do not. Your collision coverage definitely covers your car rental but for other coverages, you may need to find out from your insurance broker or company.
Does insurance cover all car accident expenses?
The answer is no. Your policy covers you up to a limited amount of money. In the US, every state has its minimum required insurance coverage. As a way to save money, many drivers choose to carry only the required minimum coverage which is not always enough.
If you bought a $10000 liability coverage and you are sued for $25000 in property damages, be ready to fork out the remaining $10000. The $10000 you bought to cover your liability is called the limit of your coverage. Smart people buy much higher coverages to protect themselves from such scenarios. What you buy is what you get!
How does collision car insurance work?
Collision insurance coverage helps to repair or replace your car if it is damaged or destroyed by a collision accident. This policy does not take into consideration if you are the at-fault driver or not, so I recommend you carry it whatsoever.
Though you may be required as a must to have it for your leased and financed car, it is optional so you are free to drop it. Just like comprehensive car insurance, collision carries a deductible and pays up to the fair market value of your car if your vehicle is totaled.
What does rental car collision insurance cover?
If you do not own a car but plan to visit friends, you traveled overseas, or want to take a trip somewhere, you can decide to rent a car or go by public transportation means. Just like other personal cars, the rented car cannot be driven around with no insurance coverage, after all, it is illegal to drive an uninsured car.
There are 3 types of car rental insurance you should think about before driving that rented car from your favorite car rental agency. These are;
- Car damage coverage. Should you return the car with damages or even serious dents or tear and wear, your rental agency will charge you more money. Car damage coverage helps to cover such incidences.
- Car theft coverage helps to pay for stolen cars or damages due to attempted theft of the car you rented.
- If you are deemed the at-fault driver in the car accident, liability car coverage will help you compensate the car you crashed and pay for medical bills for the people you injured.
- The collision damage waiver clause lets you off the hook should the rental car gets damaged while it is in your hands.
Is it necessary to buy rental car insurance?
The car you are renting should already have some liability coverage on it such that, you do not need to buy rental car insurance. But, what if you crashed another car? what if the car is stolen or damaged by a hurricane? what if you had a collision? The question remains, do you have enough money from your savings to cover such losses?
what insurance is necessary for car rental?
If you are thinking about covering your rented car, go for full coverage. I also need to remind you that, there is a probability your personal car insurance covers car rentals so make a phone call to your insurance company and find out.
You will need coverage for car damages, theft, and liability to give you peace of mind while driving the rented car.
Does car insurance cover parts?
You will be fully covered if you buy at least the following coverages.
- Collision insurance policy.
- Comprehensive car coverage.
- Liability (Third party), is mandatory in almost all states except 2.
All the above coverages cover car parts but each policy clearly states what type of parts are covered by the insurance. An example, you may be entitled to original equipment manufacturer parts (OEM), after-market parts, or recycled parts.
So, the answer is yes. Your personal car insurance covers car parts but the parts covered are different depending on what is stated in your policy.
What happens when I don't have collision coverage?
It is not a must that you must buy collision coverage for your car. Some people decide to drop this coverage just to save money. If you are involved in a car accident, your liability helps to pay off the third party whose car you crashed, or pay for bodily injuries.
Irrespective of being at fault on not, collision coverage protects your car. If you do not have collision coverage, your will pay for car damage costs from your own pockets in addition to other expenses including the cost of renting a car while yours get repaired. If you are driving an expensive car that is totaled, be ready to pay so much money to replace it.
Is collision the same as full coverage?
No, collision insurance coverage is not the same as full coverage. Full car insurance coverage requires you to have enough coverage to;
- Protect your car/property from collisions.
- protect a third party or the other car and people you injured.
- Protect your car against non-accident damages like vandalism, weather extremes, and theft.
Is collision better than comprehensive?
There is no better coverage between collision and comprehensive policy because they both serve 2 different important purposes. You need both insurance coverages unless you have a tight budget.
Events from no car accidents like damages from hurricanes, earthquakes, floods, theft, vandalism, and others are covered by comprehensive, while if your car is damaged due to a car crash, you will need your collision coverage.
Both comprehensive and collision insurance coverages are optional unless you leased or you are financing your car. Also, both coverages carry a deductible which you will pay as a contribution to damage costs, or the cost to replace your totaled car.
When to drop collision insurance?
Yes, you can choose to drop this coverage. Think about dropping collision car insurance in situations like;
- If you paid off your financed car. Car loan agencies or banks require you to buy full coverage and also gap insurance. If your car loan is paid off, consider dropping it to save money.
- If you are a loaded guy such that damages from a car crash won’t trouble you financially, Just drop this coverage.
- If you are driving an old car, most likely your premiums will be way higher than the actual value of your car. For instance, paying $1500 yearly for a $2000 car value is not a smart move. Your aged car will most likely be totaled following a car accident and you won’t like how meagre is your compensation.
- Many experts I spoke to suggest dropping collision insurance coverage if you are driving a 5 or more-year-old car. Other folks say you should drop this collision car insurance once your odometer reads more than 100,000 miles.
- According to forbes.com, 95% of drivers in the USA do not report an at-fault car crash. If you are one of those drivers with one of the best driving records, consider dropping collision car insurance coverage.
Do I need comprehensive and collision?
If your budget is not so tight, and if you are the guy who wants full protection of your valued property, yes you need both comprehensive and collision coverages. would you risk going partially insured or not insured if you are driving a $1,100,000 2021 Nissan GT-R50?
Not only the above but would you also manage with ease the replacement of such a car with a brand new or same car after a car crash? What about if you are driving a $2000 10-year-old banger with over 200,00omiles odometer reading? which of the 2 vehicles is worth protection? way your options and make a better decision.
Is collision insurance required by law?
My simple research returned zero results about any state that requires you to carry collision insurance coverage. This means that this coverage is optional. But do not forget that you must buy a collision policy if you leased your car, or if you still owe some car payments.
What is collision deductible?
Some car insurance policies carry deductibles while others do not. Examples of coverages that carry deductibles are;
- Comprehensive
- Collision
- Underinsured and uninsured motorist insurance coverages.
If you bought a $10000 collision coverage with a $2000 deductible, in the event of an accident, you will pay your deductible ($2000) while the company pays $8000 towards the repair or replacement of your vehicle.
Your insurance rate will be cheaper if you chose a higher deductible while the opposite is true for a low deductible. Chose a higher deductible if you are sure you have enough money to contribute towards costs to repair or replace your car.
Who gets the insurance check when a car is totaled?
This is simple. If the car is declared a total loss, the owner of that car receives a settlement check. Whoever files the claim and proves ownership of the car gets paid. If you leased the car, the lessor company receives the payment which you may or may not be required to top up depending on if you still owe money on the car or not.
If you are driving a financed car, part of the settlement check goes to you while the rest goes to your loan company. Here you will need to agree with your financing company on how best to share the settlement money. Of course, this depends on how much you owe on the totaled car.
Does full coverage cover at-fault accidents?
What is full coverage?
I already mentioned that full car insurance coverage includes collision, comprehensive, and liability coverages. Liability pays the other driver, while the remaining 2 coverages cover you the insured.
Some states are known to not fault states, other wants the company to find out how each driver contributed to the accident (shared fault) while others let the company or authority go about it. On the same note, some coverages do not care if you are at fault or not, and also some companies may penalize you if you are partial or solely at fault for the accident.
Yes, collision will compensate you irrespective of being at fault or not. so the answer is that full auto insurance coverage compensates you even if you are the causer of the accident. This is because collision coverage forms part of the full insurance coverage.
How much should I make my collision deductible?
You will be asked to pay your deductible every time you file a claim against your insured event. The deductible varies from person to person, and from insurable risk to another. From my own experience, you can choose any amount from $0 to $2000 depending on how much coverage you need.
The insurance broker I spoke to told me many people choose $500 as their deductible. Probably you should follow suit and go with $250 to $1000. I still advise you to choose any amount you are comfortable paying because that’s the amount you will be required to pay before your insurance agent cover the rest.
Does insurance cover anything before the deductible?
This depends on many factors. For instance, some companies want you to pay your deductible first before they pay the rest amount, while other companies do not care.
If your settlement is $5000 and you chose a $1000 deductible. Company A may ask you to produce your deductible upfront while a different company B will just cut you a check worth $4000 and let you do things your own way. Also, some of the body shops demand the deductible upfront while others are relaxed about it.
You may need to talk to your insurance company and or body shop and see how you are helped. Some body shops can decide to waive off the deductible, while others may allow you to pay installments depending on what you agree upon.
Be warned that you may face legal punishments or your insurance be terminated if the body shop charges your insurance company highly just to waive off your deductible. Also, you risk getting your car repaired with nonstandard parts if your body shop says they will waive off your deductible.
What happens if I don't meet my deductible?
You can decide to try the following.
- File a claim only when you have the deductible at hand.
- Negotiate with the body shop for a deductible waiver.
- Cut a deal with the body shop and pay the deductible later with maybe interests, or pay it in installments.
- Negotiate with your insurance company and agree not to pay your deductible upfront.
- Choose the smallest amount of deductible you can afford but be ready to pay higher premiums upfront.
- Choose to drop deductible carrying coverages like comprehensive and or collision policy.
In summary, collision car insurance coverage is the policy you will buy to safeguard your car. it compensates you by paying for repairs or replacing your car irrespective of whether you are at fault for the accident or not. The downside of collision coverage is that it carries a deductible, and pays the actual cash value of your car should it be declared a total loss.
