What Is Collision Insurance
Collision insurance pays to repair or replace your car after it hits something, no matter who caused the accident.
It covers damage to your own car in a crash
Collision insurance pays for repairs to your car if you hit another vehicle, hit an object like a guardrail or a tree, or roll your car, regardless of who was at fault. It's separate from liability coverage, which pays for damage you cause to someone else's car or property.
Most lenders require it if you're financing or leasing your car. Once your car is paid off, carrying it becomes a choice, and that choice usually comes down to what your car is worth and what you'd pay out of pocket to fix or replace it without this coverage.
What your car is worth changes whether it's worth keeping
Collision coverage only pays up to your car's actual cash value, minus your deductible. If your car is older and worth little, the payout in a bad accident might barely cover the deductible, let alone a full repair.
This is the main reason people drop collision coverage over time. It's not that the coverage stops working. It's that the math stops making sense once the car's value falls close to what you'd pay out of pocket anyway.
A simple way to check is to look up what your car would sell for today, then compare that to your deductible and your annual premium for collision coverage. If the premium plus deductible is close to the car's value, ask your insurer what you'd actually receive in a claim before deciding either way.
If you still owe money on the car or it would be expensive to replace, keeping collision coverage usually still makes sense.
Your deductible decides what you pay first
Every collision claim starts with your deductible. You choose that amount when you buy the policy, and it's what you pay before the insurer covers the rest.
A higher deductible lowers your premium but means more money out of pocket if you're in an accident. A lower deductible costs more upfront but protects you from a large bill after a crash.
If you're on a fixed income, it's worth asking your insurer to show you the premium difference between deductible amounts so you can decide what you could actually afford to pay if you needed to file a claim tomorrow.
Some insurers also let you adjust your deductible at renewal, not just when you first buy the policy, so this is worth revisiting each year rather than deciding once and forgetting it.
Questions people ask about this
Do I need collision insurance if my car is paid off?
No, once your car is paid off, collision insurance becomes optional rather than required. Whether to keep it depends on your car's value and whether you could afford to repair or replace it without that coverage. If the car is worth little, many drivers drop collision and keep only liability coverage.
Does collision insurance cover a deer or an animal strike?
No, hitting an animal is usually covered under comprehensive insurance, not collision. Collision applies to crashes with other vehicles or objects. If you only carry collision coverage, an animal strike may not be covered at all, so check with your insurer about whether you also carry comprehensive.
Will collision insurance cover me if I'm at fault?
Yes, collision coverage pays for your own car's damage regardless of fault. That's its main purpose. Liability coverage, which is a separate part of your policy, pays for the other driver's damage when you're at fault.
Can I drop collision insurance and keep liability only?
Yes, as long as your car is paid off and not leased or financed. Dropping collision lowers your premium but means you'd pay out of pocket for any damage to your own car, no matter who caused the accident.
How do I know what my car is worth for collision coverage?
Your insurer calculates your car's actual cash value using its age, mileage, condition, and sale prices for similar cars in your area. You can ask your insurer for this number directly, or check listings for your car's make, model, and year to get a rough idea before you call.
See what collision coverage would cost for your car before you decide to keep it or drop it.
Pull up your car's current market value this week, using listings for its year, make, and model in your area. Call your insurer and ask what your collision deductible and premium are, and what you'd actually receive in a payout if you filed a claim today. Compare that payout to the car's value and to what repairs typically cost for your make and model. If you're still financing or leasing the car, check your loan or lease terms, since collision coverage is likely required until that's paid off. Bring these numbers with you when you compare quotes, so you can see clearly what keeping or dropping collision coverage would mean for your situation.
