Collision Protection

What is Collision Insurance?

Collision insurance is a type of car insurance coverage that helps pay for the cost of repairing or replacing your vehicle if it’s damaged in an accident, regardless of fault. These types of incidents include:

• A collision with another vehicle
• A collision with a stationary object like a guardrail or pole
• A rollover accident
• A hit-and-run

Collision Coverage Regardless of Fault

Collision coverage protects a vehicle when it’s involved in an accident, whether it be a rollover, hit-and-run, collision with another vehicle, or an encounter with a fixed object like a pothole, guardrail, or light post. Collision coverage applies only to your vehicle, it doesn’t cover whatever your vehicle collided with. That damage would be covered under property damage liability coverage if you were found legally responsible for the accident. Your insurance company will assess the damages to your car and pay for the repairs. All you’ll owe is the deductible.

A deductible is the out-of-pocket expense you agree to pay per loss before any payment from the insurance company is distributed. Deductibles range from $0 - $2,000, but limits of $250, $500, or $1,000 are most common. So, if you have a $500 deductible and the estimated cost of repairs to your vehicle totals $2,000, you would owe $500 to the repair facility before your insurance will send the remaining $1,500 their way. Generally, the rule of thumb is that the higher the deductible, the lower the corresponding coverage premium.

Do I Need Collision Insurance?

Although collision auto coverage is not required by any state, your lending institution may require it if you are financing your auto. If your vehicle is involved in an accident and considered “totaled” (when the collision repair costs exceed a certain threshold of the vehicle’s value), you and your lending institution would be protected up to the actual cash value (ACV) or “fair market value” of the vehicle. Your deductible will still apply in a total loss scenario.

Depending on the terms of your loan, it’s possible that the vehicle will depreciate more quickly than the value of your loan. To avoid paying the difference to the lender out of pocket, you can purchase gap insurance, which typically covers the difference between a vehicle’s actual cash value and the sum owed to the lender.

Learn more about coverage details and call (833) 910-3910 for a free auto insurance quote from Mercury.