What Is Collision Coverage and Does Your Vehicle Need It? A Guide

Collision Coverage

In any given year, there are approximately 48 million new and used cars sold in the US. When you first buy a car, you worry about things like financing and getting the car registered. Somewhere in the middle of all of that, you get auto insurance coverage for your new vehicle.

While shopping for that insurance, you likely discovered that car insurance comes in a few different flavors. There are the two that most people recognize: liability and comprehensive. Collision coverage is the less famous option.

Asking yourself, “What is collision coverage?” If so, keep reading to learn what collision coverage is and if you need it.

What is Collision Coverage?

To understand what collision coverage is, it’s easier to start with the other main types of auto insurance. Liability auto insurance covers damage you do to other people’s property or persons with your vehicle, at least when you’re at fault.

Let’s say you get rear-end someone at a stop sign, for example. It’s a low-speed accident, so you mostly damage their bumper. Your liability policy covers the repairs for their bumper.

Comprehensive insurance covers auto theft or damage to your vehicle from things not related to an auto accident. For example, let’s say a freak hail storm blows through your neighborhood and damages the windows on your car. A comprehensive policy covers that.

Collision coverage kicks in to cover damage done to your vehicle in most types of collisions.

What Does Collision Coverage Actually Cover?

Collision coverage covers a few main areas, such as:

  • Damage to your car when hit another vehicle
  • Damage to your car when you hit stationary objects like a fence
  • Single-car accidents where you roll your vehicle

It’s important to understand that collision coverage offers no health care coverage. It will sometimes cover damage to your vehicle done by another driver if the other driver’s insurance can’t cover the full costs.

Does Your Vehicle Need Collision Coverage?

The question of whether or not you need collision coverage boils down to, “It depends.” Anytime you lease a vehicle or if you buy a car with financing, collision coverage is a standard requirement from the leasing company or the loan company.

If you own your vehicle outright, collision insurance moves from the required category to the optional category. If you have no collision coverage and get into an accident, however, the repair costs will land in your lap.

Collision Coverage and You

Now that you can answer the question of what is collision coverage, it becomes a question of do you need it. If you lease or finance a vehicle, the answer is a firm yes. The leasing company or loan company will insist on it.

If you own your vehicle or buy a used vehicle outright, it’s a choice. If the vehicle is fairly new, it’s often worth the extra cost for the coverage. For older vehicles, most people take a pass.

Looking for more tips on maintaining your car? Check out the Auto Maintenance posts on our blog.