What Is Collision Coverage?

Last Updated on December 27, 2025

Collision coverage is the part of an auto insurance policy that helps pay to repair or replace your vehicle after it’s damaged in a crash—whether you hit another car, a curb, a guardrail, a tree, or you roll over. You pay your share first (your deductible), and your insurer covers the rest up to your car’s value.

This coverage is optional by state law, but if you lease or finance your vehicle, your lender will usually require collision (and comprehensive) until the loan is paid off.

Key Takeaways

• Collision coverage helps pay to repair or replace your car after a crash with another vehicle or object (or a rollover), minus your deductible.
• It’s not legally required in most states, but lenders typically require collision (and comprehensive) if you finance or lease your vehicle.
• The maximum payout is usually capped at your car’s actual cash value (ACV), so collision may be less cost-effective on lower-value vehicles.
• Choosing a higher deductible can lower your premium, but pick an amount you could realistically afford after an accident.

Quick Facts on Collision Coverage

• Helps pay to repair or replace your car after a crash with a vehicle or object
• Not legally required, but commonly required by lenders and leaseholders
• You choose the deductible (higher deductible usually means a lower premium)
• The payout is generally capped at your vehicle’s actual cash value (ACV) minus the deductible

What Is Collision Coverage?

Collision coverage pays for physical damage to your vehicle caused by a crash—no matter who’s at fault. It typically applies if you:

• Hit another vehicle
• Hit an object (like a pole, guardrail, curb, or parked car)
• Roll your vehicle
• Damage your car while trying to avoid something in the road (for example, swerving to miss debris)

Collision coverage can also help when you damage your vehicle after hitting a road obstruction, depending on the situation and your policy.

Collision Coverage vs. Comprehensive Coverage

Collision and comprehensive coverage are often paired together, especially on financed vehicles. The easiest way to remember the difference:

• If you hit something, collision pays.
• If something hits your parked car (like a falling tree branch), or your car is stolen or vandalized, comprehensive pays. Learn more here: What is comprehensive coverage?

And if you damage someone else’s property in an at-fault crash, that’s handled by property damage liability coverage—not collision.

What Collision Coverage Does Not Cover

Collision coverage is for your vehicle’s crash damage. It generally won’t cover:

• Your injuries (those are typically covered by MedPay, PIP, or health insurance, depending on your state and policy)
• Damage to the other driver’s car (that’s liability coverage)
• Non-crash losses like theft, hail, flood, animal strikes, or vandalism (usually comprehensive)
• Mechanical breakdowns or wear-and-tear

Do You Need Collision Coverage?

You may want collision coverage if replacing your vehicle would be a financial hit. It’s especially worth considering if your car is newer, has a higher market value, or would be expensive to repair due to advanced safety technology.

When Collision Coverage Is Required

If your vehicle is financed or leased, your lender may require collision. If you drop required coverage, the lender can add its own “force-placed” (lender-placed) coverage. These policies are typically expensive and mainly protect the lender’s interest—not your budget.

Want a deeper breakdown? See: How much collision coverage do I need?

When It Might Make Sense to Skip or Drop Collision

For older vehicles, collision coverage can become less cost-effective—especially when the premium plus deductible starts approaching the car’s value. A simple way to think about it:

• Estimate your payout: ACV − deductible
• Compare it to your cost: annual collision premium + deductible
• If the coverage would only save you a small amount in a worst-case crash, you may prefer to self-insure the risk

If you’re carrying minimum coverage to keep costs down, collision can be the difference between getting back on the road quickly and needing to pay thousands out of pocket after a wreck.

How Collision Deductibles Work

Collision coverage comes with a deductible—your share of the claim. If repairs cost $6,000 and your collision deductible is $1,000, you pay $1,000 and your insurer covers the remaining $5,000 (as long as the claim is covered and doesn’t exceed the car’s value).

Most insurers let you choose your deductible (commonly $250, $500, $1,000, or higher). Here’s a guide to help you decide: collision deductible.

If paying a deductible would be a hardship, you can also read: How can I avoid paying my car insurance deductible? (in some situations, the other driver’s insurance may end up responsible).

What Affects the Cost of Collision Coverage?

Your collision premium depends on many rating factors, including your car’s value, repair costs in your area, your chosen deductible, your driving and claims history, and where you live. Your driving history is one of the biggest factors insurers consider.

FAQs About Collision Coverage

Final Word on Collision Coverage

Collision coverage helps repair or replace your car after a crash with another vehicle or object, or after a rollover. It’s optional by law, but lenders usually require it for financed or leased vehicles.

Collision is most valuable when you can’t easily afford to repair or replace your vehicle out of pocket—especially if you’re worried about scenarios like somebody hitting your parked car or other common accident situations. And since many drivers experience at least one crash in their lifetime, it’s worth understanding your odds and financial risk: car accident odds.