Collision Car Insurance Coverage Explained

Car accidents happen when you least expect them. One moment you’re driving home, the next, a pothole, guard rail, or another vehicle changes everything. The National Safety Council (NSC) estimates that more than 44,000 people died in preventable traffic crashes during 2024. And car crashes in 2019 alone resulted in more than $340 billion in economic cost (NHTSA 2019). Since each accident causes a significant amount of property damage, having collision coverage on your vehicle can save you from unexpected expenses.

So, what is collision car insurance? In simple terms, it is coverage that pays for repairing or replacing your vehicle after a crash. And it pays you regardless of fault. The insurance company looks at the cash value of your car and covers the cost of repairs, minus the deductible. Unlike liability insurance, which pays for damage to others, collision insurance focuses only on damage to your car.

Keep reading this article to learn more about collision insurance, what it covers, its cost, benefits, and drawbacks, how it is different from comprehensive, and more. 

What Does Collision Auto Insurance Cover?

Collision insurance is about protecting your own vehicle. Whether you cause the accident or not, this coverage will cover the cost of the damage up to your policy limits, minus the deductible. And if you don’t have it, you will have to carry the burden of full repair bills in case of accidents or collisions.

Here are the common situations where collision insurance covers your car: 

• Accidents with another vehicle, whether on highways or in parking lots 
• Hitting stationary objects like fences, trees, or guardrails 
• Single-car rollovers or losing control on icy roads 
• Someone hitting your parked car and leaving with the damages 
• Any damages resulting from hit-and-run accidents 
• Rental car accidents, depending on your policy terms

Please note that collision auto coverage pays for repairs or replacement up to the cash value of your car, minus your deductible.

If you're looking for affordable car insurance that includes both collision and liability coverage, contact USA Auto today. We offer free auto insurance quotes online, and you can reach us at (866) 855-1872 with any questions. 

What Isn’t Covered by Collision Insurance?

Collision insurance is helpful, but it does not cover everything. Many drivers even confuse it with full coverage or comprehensive coverage. But they are actually different.

Here's what collision insurance does not cover: 

• Natural disasters like floods, earthquakes, or hurricanes. 
• Falling objects such as tree branches or hail. 
• Theft or vandalism of your car 
• Injuries to you or passengers during an accident. 
• Damage to another person’s property (covered by liability insurance instead).
• Medical expenses that fall under personal injury protection.

For these risks, you need comprehensive insurance coverage or other add-ons in your auto insurance policy. 

What Are Collision Coverage Limits and Deductibles?

Every insurance policy comes with restrictions. Collision insurance is no different. In this case, when it comes to compensation, you have to consider coverage limits and deductibles.

Your coverage limit is the maximum amount the insurance company will pay. Usually, this is tied to the actual cash value of your car at the time of the accident. If the cost of repairs is higher than your car’s worth, the insurer may declare it a total loss.

Then comes the deductible. This is the amount you agree to pay out of pocket before insurance pays the rest. A higher deductible often lowers your monthly premium, while a smaller deductible means higher premiums.

Pros and Cons of Collision Auto Insurance Coverage

Like most financial tools, collision insurance has two sides. It offers strong protection, but it also comes with a trade-offs.

The Pros:

• Covers the cost of repairs to your own car after an accident. 
• Works even if the accident was your fault. 
• Protects against unexpected expenses like hitting a pothole or guard rail. 
• Peace of mind when driving a newer or financed vehicle.

The Cons:

• Does not cover natural disasters, theft, or injuries. 
• Can be expensive compared to comprehensive insurance coverage. 
• Deductibles reduce how much you actually receive in a claim. 
• May not make sense for older cars with low cash.

Please note that collision insurance is extremely valuable when your car is worth protecting. But if you have older vehicles, the cost sometimes outweighs the benefits. 

What Is the Difference Between Collision and Comprehensive Auto Insurance?

Drivers often think that their car is protected in any scenario if they have collision insurance. Besides, they usually confuse collision and comprehensive coverage. Although both these coverages protect your car but they work in very different ways.

Collision insurance pays for damage when your car hits another vehicle, a fence, or even flips over. It focuses on accidents on the road or while driving. Comprehensive insurance, on the other hand, handles risks beyond crashes. It protects your vehicle from theft, vandalism, fire, natural disasters, falling tree branches, or even hitting a deer. If something damages your car outside of a collision, that’s when comprehensive coverage steps in.

Here's a quick table illustrating the differences between these two coverages: 

Aspect	Collision Coverage	Comprehensive Coverage
Covers	Road accidents and crashes	Non-crash events like theft or natural disasters
Examples Covered	Car accidents, rollovers, and hitting objects	Fire, flood, theft, vandalism, falling trees, deer-collision
Who Benefits Most	Drivers with a newer or financed vehicle	Drivers in areas with high theft or weather risks
Which Is Better	Best for accident protection	Best for unexpected non-driving damages

How Much Does Collision Car Insurance Cost?

According to Forbes Advisor, the national average cost for collision insurance is $655 per year. As per the Insurance Information Institute (III), drivers pay an average of $290 per year. This means the rate could vary a lot based on several factors. And based on our research, the average cost range could be between $300 and $800 annually.

On average, the premium reflects the risk of damage to your car and the cash value of your vehicle. If you have a new or financed vehicle, you’ll pay a higher premium. On the flip side, drivers of older vehicles pay much less.

Key factors affecting collision insurance cost:

• Age, make, and model of your vehicle 
• Your driving history and accident record 
• Where you live (urban areas often cost more) 
• Annual mileage and how often you drive 
• Deductible amount you select 
• Whether the vehicle is leased or financed 
• Insurance company’s rating system and policy rules

Do I Need Collision Insurance for My Car?

It depends on your car’s value, your finances, and your comfort with risk. Besides, if you drive a financed vehicle, your lender will almost always require collision insurance along with comprehensive insurance and liability coverage. On the other hand, if your car is older and worth little on the market, the payout after a crash might not justify the premium. In that case, liability insurance may be enough.

Situations When You Should Drop Collision Insurance

If you’ve already been carrying collision insurance for quite some time, then it is best to reevaluate whether your car truly needs collision insurance. Because in many cases, your car may not need collision insurance any longer. In that case, it is best to drop collision coverage and save some money.

Here are common times to drop it: 

• When your car’s cash value is very low. 
• When your annual premium is higher than what the car is worth. 
• If you can comfortably pay out of pocket for repairs or replacement. 
• When your car is old and fully paid off. 
• If you no longer drive often or rely on the vehicle daily 

Frequently Asked Questions (FAQs)

Does collision insurance cover other drivers?

No, collision insurance only pays for damage to your car. To cover others, you need liability insurance. 

Are hit-and-run accidents covered by collision car insurance?

Yes, in many cases. Collision insurance will help repair your car after a hit-and-run, but you’ll still pay the deductible.

Which person would most benefit from having collision insurance?

Drivers with new, leased, or financed cars benefit the most. It keeps them from losing thousands in repair costs.

What is the difference between collision and liability insurance?

Collision covers your car’s damage after an accident. Liability covers other people’s property and injuries if you’re at fault.

Am I covered under collision insurance if I am at fault?

Yes. Collision coverage protects drivers regardless of fault.

How do I purchase the best collision coverage in Michigan?

Shop around with multiple insurance companies, compare quotes by zip code, check deductibles, and balance costs with coverage. You can consult a licensed insurance agent for guidance. USA Auto also offers the most trusted collision coverage plan for Michigan drivers. Please reach out to us online or call us at (866) 855-1872 for a collision insurance quote.