WalletHub, Financial Company
Collision insurance is a type of car insurance coverage that pays to repair or replace your car if you’re involved in an accident, regardless of who was at fault. Collision car insurance is never required by state law, but dealerships and banks usually require it for leased or financed cars. It only pays for damage to your own vehicle, and it does not include coverage for medical bills.
What Collision Insurance Covers
- Collisions with other vehicles
- Collisions with objects like fences or trees
- Single-car accidents that involve rolling or falling over
- Damage caused by hitting an obstruction in the road, such as a pothole
Collision coverage costs an average of $382 per year. The cost of collision insurance varies based on your driving history, you car’s value, and your deductible amount. For example, high-risk drivers with a history of claims tend to pay more for collision insurance because they are more likely to be involved in an accident. And if you choose a low deductible for your policy, you will pay more for coverage.
A good rule of thumb is that you should have collision insurance on your car until the cost exceeds 10% of the vehicle’s value. However, even then, you should not drop collision insurance if you cannot afford to pay out of pocket to repair or replace your car after an accident that’s your fault. To learn more, check out WalletHub’s guide to collision insurance.
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