Collision coverage is auto insurance that helps protect the value of your car in the event of an accident.

If you hit another car or back into a telephone pole, for instance, collision insurance will pay to either repair the damage or buy a vehicle of similar current value. In both cases, you pay a deductible, which can be anywhere from $0 to $2,500 or more but typically is about $500.

Collision insurance can also help pay for car repairs if another driver hits you but does not have liability insurance — or enough liability insurance — to cover your expenses.

If you don’t own your vehicle outright, your lender will probably require that you buy collision insurance. It is otherwise optional coverage, but it’s a good idea to have collision coverage if you have a car that you cannot afford to fix yourself.

What does collision insurance cover — and not cover?

Collision is a type of car insurance that covers damage to your car when you hit another car or object like a guardrail. It also covers damage from a single-vehicle accident or rollover. Collision insurance can also cover damage from a pothole. Some collision policies include emergency roadside assistance.

Collision insurance does not cover damage to other people’s cars; your liability coverage does that. Collision does not cover the cost of medical bills resulting from any injuries, either your own or others’.

Collision insurance also does not cover theft, vandalism or damage from hitting an animal, or damage from natural disasters, such as falling tree branches, hail, or flooding. Those events are covered by comprehensive car insurance.

How much will my collision coverage pay?

Collision insurance will pay for the cost of repairs from a car accident. If your car is a total loss, your collision coverage will reimburse you for the actual cash value of your vehicle at the time of the accident. In both cases, you pay a deductible.

If you owe more than the car’s estimated value at the time of the accident, you are responsible for the balance. You can buy gap insurance to cover this unpaid loan balance.

How much does collision coverage cost?

The average cost of collision insurance nationally was $371 per year in 2020, according to the National Association of Insurance Commissioners. That’s about a third of the average full-coverage car insurance premium of $1,176.

Costs vary greatly from state to state — from an average of $245 a year in Wisconsin to $528 a year in the District of Columbia — but also from car to car. In general, the more it costs to repair your particular car, the more you will pay for collision insurance.

Your premiums will also go up as your risk of having an accident goes up. So if you have prior accidents or are an inexperienced driver, expect to pay higher premiums. Collision car insurance for teens, for example, is significantly higher than it is for middle-aged drivers without recent accidents. What you pay for a policy will also be influenced by some personal factors, including your gender, marital status, location, and even your credit history.

In all cases, you can lower the cost of your collision coverage by choosing a higher deductible.

Is collision coverage required?

No, collision coverage is an optional add-on to your car insurance policy. No state requires collision coverage. However, there are factors you should consider when thinking about how much car insurance you need. If you are financing or leasing your car, your lender will likely require that you have full coverage, which includes collision and comprehensive car insurance as well as the liability car insurance required under your state laws.

If you fail to buy collision and comprehensive coverages, your lender will buy policies — very expensive policies called force placed insurance — to protect the value of its collateral, then add them to your loan balance.

If you own your car outright, a good rule of thumb is if you could not comfortably afford to pay to replace your car, then you should buy collision coverage.

How to save on collision coverage

Insurance companies offer various add-on options that may help you save money in the event of an accident. In this era of soaring car insurance rates, it's certainly worth the research. Ask your insurer if they offer any of these programs:

• Collision deductible waiver. A collision deductible waiver lowers your out-of-pocket costs if you are in an accident caused by an uninsured driver. If you have added this option to your collision coverage, the insurance will waive your deductible in this case. Insurance companies will typically not cover hit-and-runs, except in Massachusetts and California when the driver is identified. Collision deductible waivers are inexpensive, a few dollars a month. It can be a good idea to add the waiver if you have a very high deductible or drive where there are a lot of uninsured drivers.

• Accident forgiveness. With accident forgiveness, your insurer agrees not to raise your premium after your first accident. Not all accidents qualify for forgiveness. For instance, insurers may exclude accidents with injuries or costly damages. In addition, you usually must be an experienced driver with a recent accident-free record to qualify. Adding accident forgiveness to your auto coverage can spare you the driving points and hefty premium hikes that often follow a collision claim.

• Disappearing deductibles. Also called vanishing deductibles, some insurance companies offer this to reward drivers who don’t file claims. For every year that you do not file a claim, your deductible is reduced, typically by $50 or $100 per year.

• Discounts. Don't forget to ask for all other available insurance discounts you may qualify for.

Frequently asked questions about your car insurance policy

Here are some common situations drivers encounter and wonder how their collision coverage apply.

Can I get collision insurance without comprehensive car insurance?

Yes, you can choose to buy collision insurance and not comprehensive insurance. Collision and comprehensive are two different types of insurance. While collision insurance covers damage to your car if you hit an object, comprehensive car insurance covers theft or damage from animal strikes, hail, falling tree branches, or other non-driving related events.

My car is getting old. Should I drop my collision coverage?

When to drop collision coverage is a common dilemma as the odometer on your car rises and the Blue Book value plummets. The general advice is that if the annual cost of the coverage plus your deductible is more than 10% of the cost to replace your vehicle, then it may be worth dropping collision coverage. But don’t drop your coverage if you need a car and cannot afford to buy another if yours is totaled.

Do I need collision insurance if I’m an excellent driver?

It’s true that if another driver causes an accident, their liability insurance is supposed to pay to repair your car. However, think about how much that could cost. A new car costs nearly $50,000, on average. At the same time, many drivers only carry the minimum amount of liability car insurance, between $5,000 and $25,000 depending on the state. Once that amount is exhausted, you’ll be left to foot the bill or sue. If you have collision insurance, your insurer will take care of both. And if you have uninsured motorist coverage that includes property damage, you may not need to tap into your collision insurance.

Is my car covered if I wasn’t the one driving?

Probably. Insurance typically travels with the car, not the driver. If someone else crashes your car — as long as the person had your permission to drive the car and was not an excluded driver on the insurance policy — your car will be covered under your collision insurance. An excluded driver is someone in your household who has been removed from your policy. This might be a teenage driver or a driver with an accident history that would raise your insurance cost.

What if my car is totaled?

If your car is totaled, your collision coverage will reimburse you for the value of your vehicle at the time of the accident, minus your deductible. This amount is negotiable to some degree and can include taxes and licensing costs you have already paid out.

Are there other things that collision insurance will not cover?

Neither comprehensive nor collision insurance pays for damage due to normal wear and tear or mechanical issues. Other common exclusions are damage incurred if you were engaged in illegal activity at the time of the accident, the cost to repair modifications that your insurer didn’t agree to cover, damage to your personal possessions, or damage incurred when an excluded driver was at the wheel.