Collision Car Insurance: Why You Need It and How It Benefits You

Did you know that there were more than 5.25 million car crashes reported in the U.S. in 2020? That’s more than 14,000 car crashes per day! And that number is likely to go up this year, as more people get back on the road after the pandemic. In fact, according to Statista, the frequency of collision insurance claims for physical damage dropped sharply in 2020 and remained low in 2021, but it’s expected to rise again as driving activity increases. [6]

If you want to protect your car from the unexpected, you might want to consider getting collision car insurance. But what is collision car insurance and what does it cover? How much does it cost and how does it work? And most importantly, what are the benefits of having collision car insurance?

In this article, we’ll answer all these questions and more. We’ll explain the main benefits of collision car insurance and why you might need it. We’ll also give you some tips on how to find the best collision car insurance for your needs.

What Is Collision Car Insurance?

Collision car insurance is a type of coverage that pays to repair or replace your car if it’s damaged in an accident, regardless of who is at fault. It’s usually an optional coverage, meaning you can choose whether to add it to your auto insurance policy or not. However, if you have a car loan or lease, your lender or leasing company will most likely require you to have collision car insurance.

Collision car insurance covers damage to your car caused by:

• A car crash with another vehicle
• A car crash with an object, such as a fence, pole, or guardrail
• Another car crashing into your vehicle, such as a hit-and-run
• Your car rolling over

Collision car insurance does not cover:

• Damage to another person’s car
• Injuries
• Damage to your car related to weather, such as hail damage or flood damage
• Car theft
• Repairs to an object you crash into, such as a fence or pole

If you want coverage for these situations, you’ll need other types of insurance, such as liability insurance, comprehensive insurance, personal injury protection (PIP), or uninsured/underinsured motorist coverage.

Benefit 1: Collision Car Insurance Protects You from Paying Out of Pocket for Repairs or Replacement of Your Vehicle

One of the main benefits of collision car insurance is that it protects you from paying out of pocket for repairs or replacement of your vehicle if it’s damaged in an accident. This can save you thousands of dollars and give you peace of mind.

For example, let’s say you hit a pothole and damage your suspension system. The repair bill could be around $1,500, depending on the extent of the damage and the type of your car. If you have collision car insurance, you only have to pay your deductible (the amount you agree to pay before your insurance kicks in), which could be as low as $250 or $500. The rest of the bill would be covered by your collision insurance.

Or let’s say you hit a tree and total your car. The market value of your car could be $10,000, but you still owe $12,000 on your loan. If you have collision car insurance, it would pay up to $10,000 to replace your car (minus your deductible). Without collision car insurance, you would have to pay the entire $12,000 out of pocket.

The cost of collision car insurance depends on several factors, such as:

• Your deductible: The higher your deductible, the lower your premium (the amount you pay for your insurance), and vice versa.
• Your vehicle value: The more expensive your car is, the more it costs to repair or replace it, and the higher your premium.
• Your driving record: The more accidents or violations you have on your record, the higher your risk of filing a claim, and the higher your premium.

According to Forbes Advisor [7], the national average cost for collision insurance is $601 annually for full coverage. However, this can vary widely depending on where you live and what kind of car you drive. For instance, drivers in Florida pay an average of $1,101 per year for collision coverage, while drivers in Vermont pay only $342 per year [7]. Similarly, drivers who own a Tesla Model Y pay an average of $1,128 per year for collision coverage, while drivers who own a Honda CR-V pay only $423 per year [7].

Benefit 2: Collision Car Insurance Gives You More Flexibility and Control over Your Claim Process

Another benefit of collision car insurance is that it gives you more flexibility and control over your claim process. This means that you can choose your own repair shop and get your vehicle fixed faster. It also means that you have more options if the other driver is uninsured, underinsured, or at fault but uncooperative.

For example, let’s say you’re in an accident with another driver who is at fault but doesn’t have enough insurance to cover your damages. If you have collision car insurance, you can file a claim with your own insurer and get paid faster. You don’t have to wait for the other driver’s insurer to investigate the accident and determine liability. You also don’t have to sue the other driver for the difference between their coverage limit and your actual damages.

Or let’s say you’re in an accident with another driver who is at fault but refuses to share their information or cooperate with their insurer. If you have collision car insurance, you can file a claim with your own insurer and avoid dealing with the hassle of tracking down the other driver or their insurer. You also don’t have to worry about the other driver disputing the claim or delaying the payment.

Some tips to make the claim process smoother are:

• Take photos of the damage and the scene of the accident
• Get estimates from several repair shops
• Keep receipts of all your expenses related to the accident
• Contact your insurer as soon as possible after the accident

According to U.S. News & World Report [8], collision insurance also allows you to choose your own repair shop and get your vehicle fixed faster. This can be a big advantage if you have a preferred mechanic or if you want to avoid long wait times at the other driver’s insurer’s approved shop. However, keep in mind that your insurer may only pay up to a certain amount for repairs, so you may have to pay extra if your chosen shop charges more than the market rate.

Benefit 3: Collision Car Insurance Can Increase the Resale Value of Your Vehicle

A third benefit of collision car insurance is that it can increase the resale value of your vehicle. This is because collision car insurance can help you maintain or improve the condition and appearance of your vehicle. It can also help you avoid having a salvage title on your vehicle, which can lower its value significantly.

For example, let’s say you plan to sell or trade in your car in the future. If you have collision car insurance, you can get your car repaired after an accident and keep it in good shape. This can make your car more attractive to potential buyers and increase its market value.

Or let’s say your car is totaled in an accident and you have collision car insurance. You can choose to keep your car and get a reduced payout from your insurer, instead of giving up your car and getting a full payout. This way, you can fix your car yourself or sell it to a salvage yard. You can also avoid having a salvage title on your car, which means that your car has been declared a total loss by an insurer. A salvage title can reduce the value of your car by 20% to 40%, according to Kelley Blue Book [9].

Some factors that affect the resale value of your vehicle are:

• Mileage: The more miles you drive, the more wear and tear on your car, and the lower its value.
• Maintenance: The more regularly you service your car, the better its performance and condition, and the higher its value.
• Accident history: The more accidents or damages your car has, the more likely it has hidden problems or defects, and the lower its value.

According to IIHS-HLDI [10], vehicles with low collision losses tend to have higher resale values than vehicles with high collision losses. For instance, vehicles such as the Ram 2500 crew cab LWB, Chevrolet Silverado 3500 and Chevrolet Express 3500 series have low collision losses and high resale values. On the other hand, vehicles such as luxury cars, such as the BMW M8 2dr 4WD, Rolls Royce Cullinan four-door 4WD and Lamborghini Urus four-door 4WD have high collision losses and low resale values.

Conclusion

Collision car insurance is a type of coverage that pays to repair or replace your car if it’s damaged in an accident, regardless of who is at fault. It has several benefits, such as:

• Protecting you from paying out of pocket for repairs or replacement of your vehicle
• Giving you more flexibility and control over your claim process
• Increasing the resale value of your vehicle

Having collision car insurance can save you money and hassle in the long run. It can also give you peace of mind that your car is covered for any unexpected events. If you want to find out how much collision car insurance would cost you and compare quotes from different insurers, click here.