What is collision coverage?
What is collision coverage?
Collision coverage pays to repair or replace your vehicle after it makes contact with something, another car, a guardrail, a fence, a tree, a pothole, or the ground after a rollover. The cause does not matter. Whether you were at fault or the other driver was, collision coverage responds to damage on your own vehicle.
How does collision differ from liability and comprehensive coverage?
Three coverages often appear together on an auto policy, and each fills a different gap. Liability coverage pays for damage you cause to other people and their property. Comprehensive coverage pays for damage that happens without a crash, including theft, hail, fire, flooding, a falling limb, or striking a deer. Collision covers the damage to your own car when it makes physical contact with something. Many drivers carry all three.
For example, if a deer jumps in front of your car and you swerve into a guardrail, the damage to the guardrail falls under your liability coverage, while the damage to your own vehicle from the impact falls under collision.
Does Georgia law require collision coverage?
Georgia law does not require collision coverage. If you finance or lease your vehicle, though, the lender or leasing company almost always mandates it in the loan agreement. Their reasoning is straightforward: the car secures the loan, and they want it protected until the balance is paid. Once you own the vehicle free and clear, the decision is yours.
How does a deductible work with collision claims?
The deductible is the amount you pay out of pocket before your insurer covers the rest. Common choices run from $250 to $1,000. A higher deductible lowers your premium but raises what you owe after a claim.
For example, if you slide on a wet road in Alpharetta and strike a concrete barrier, causing $6,200 in damage, a $500 deductible means you pay $500 and your insurer covers the remaining $5,700. Without collision coverage, the full $6,200 comes out of your pocket.
What does collision pay on a total loss?
When an insurer pays a collision claim, they pay up to the actual cash value of your vehicle, the market value at the time of the loss accounting for age and condition, not the original purchase price. If repair costs exceed that figure, the vehicle is typically declared a total loss and you receive the actual cash value minus your deductible.
Common situations where collision responds include rear-ending another vehicle at a traffic stop, a single-car accident where you strike a guardrail or median, a parking-lot collision where the other driver is uninsured and leaves no contact information, and rollover accidents on steep or slick roads.
When does collision coverage make financial sense on an older vehicle?
Whether collision remains cost-effective on an older vehicle depends on the car’s current market value, the deductible amount, and the annual premium. If the vehicle’s market value is close to or below the combined annual premium plus deductible, the financial case for carrying collision weakens. A licensed advisor can run the comparison for your specific vehicle and situation.
Olive Cover offers a free coverage review to go through your current policy and identify any gaps or coverage you may no longer need. Request your free coverage review here.