Automotive
What is Collision Coverage?
Definition
Collision coverage pays to repair or replace the policyholder's own vehicle after a crash with another vehicle or object, regardless of fault. It is optional in every state but required by lenders on financed vehicles.
Real-World Example
A driver rear-ends another car in a parking lot. The other driver's liability may not apply since the policyholder was at fault, but collision coverage — after a $500 deductible — pays the $6,200 repair.
Why It Matters
Dropping collision to save premium can make sense on an older vehicle worth less than ten times the annual premium plus deductible. On a financed vehicle it is non-negotiable.
Frequently Asked Questions
Does collision cover hitting a deer?
No — that's comprehensive. Collision applies to impact with another vehicle or a stationary object.