Car Insurance / Types of Car Insurance / Do you need collision coverage?
Collision coverage is what pays to repair or replace your car in the case of a crash you cause, either with another vehicle or a stationary object, or in a crash caused by an uninsured/underinsured motorist if you don’t have UI/UIM coverage.
Reviewed by: Max Cho, Licensed Insurance Broker NPN 20377411
Types of Car Insurance: Minimum Required Insurance / Liability Coverage / Uninsured Motorist / Collision / Comprehensive / PIP / MedPay
No. Collision coverage is not legally required in any state.
Some lenders require you to have collision coverage, especially for leased vehicles. This is because technically the lender owns the vehicle and they want to recover as much of their loss as they can if a vehicle is totaled. The lenders assume you cannot pay what you owe on the totaled vehicle all at once.
If you need more coverage, because you owe more on your car than its current value, you should look into Gap insurance (sometimes called Loan/Lease Gap insurance).
That depends. The main question to ask is whether you can afford to replace your car if it is totaled in a crash you cause or has a big repair bill.
Your collision coverage limit is typically the actual cash value of your vehicle (its value minus depreciation). You pay the deductible (of your choosing) when you make a claim for your collision coverage. The coverage does not include aftermarket additions like sound systems and trim unless you have special endorsements for these items (you pay extra for the endorsements in your premium).
While you don’t decide how much collision coverage you have, you do decide what your deductible is. Typically, the higher the deductible you elect, the lower the premium for this coverage will cost.
If you drive a beater because you’re frugal, you may want to skip these coverages, but remember whatever that coverage you have for your regular insurance policy is what the insurance company will pay when you crash a rental car!
Here are some things to consider:
The table shown below illustrates how collision coverage impacts your monthly premium based on how much your car is currently worth (not what you paid for it) and excludes the value of any upgrades or after-market additions.
Here are some interesting things to take away from this data:
* Not enough data to be reliable
** This dataset is heavily influenced by Progressive Insurance’s policy quotes. Across the board, Progressive seems to give the best premiums to people who elect a $750 collision deductible, many other companies don’t offer this as a deductible amount.
All of our quote data assumes the driver is: single, college educated, has a clean driving record, and has been driving since 16 years old. Age, gender, location, and miles driven per day are variable. We do not consider any discounts which might apply to you such as those for being a veteran, having multiple policies, loyalty, etc.
The scenario above assumes you have at least 100/300/100 liability coverage limits, with UI/UIM and PIP where required.
Note: As Coverage Cat founder Max Cho likes to say, “insurance prices are weird.”
Collision coverage, when combined with comprehensive coverage and upgraded liability coverage, is often considered part of full coverage. There isn’t any standardized understanding of “full coverage” and both collision and comprehensive coverage aren’t a smart decision for every driver.
Coverage Cat shops for your insurance for you. We search across dozens of major insurers, and use data science to compare millions of real quotes, to find the best combination of policies, coverage, and price for your personal financial situation.
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