Glossary
Collision coverage, defined
The part of an auto policy that pays to repair or replace your own vehicle after it hits, or is hit by, another vehicle or an object, whoever was at fault. It is optional unless a lender requires it, and it carries a deductible.
In practice
When another driver is at fault, their liability coverage should pay for your car; using your own collision coverage instead gets the repair started sooner, and the insurer then recovers its money from the other carrier and refunds your deductible. When you are at fault or the other driver cannot be found, collision is the only thing that pays for your car. The deductible is the main lever on its price.
A worked example
Suppose you slide into a pole on an icy road and the repair is $5,500 with a $1,000 collision deductible. The insurer pays $4,500 and you pay $1,000. Had you chosen a $500 deductible, the insurer's share would be $5,000 and the premium would have been somewhat higher all along. Hypothetical figures.
Applies to: Auto InsuranceCommercial Auto Insurance