What is Auto Collision Insurance?

Auto collision insurance is a type of coverage that helps pay to repair or replace a vehicle damaged in a car accident. It specifically deals with accidents that occur while the insured person is driving, and applies to the insured person's vehicle. Damage done to others' property is covered by auto liability insurance. Damage or loss caused by other factors, like theft, vandalism, or weather are covered by auto comprehensive insurance.


Auto collision insurance is not required by law like auto liability insurance. It is an option that can be added to an auto insurance policy. However, if you have a car loan on your vehicle or the vehicle is leased, the lien holder could require you to have auto collision insurance as part of your agreement.


When auto collision insurance is purchased, the insured party must designate the terms of the policy. They must decide the policy limit. This is the maximum amount that the insurance company will pay to cover the damage. The standard coverage limit is $100,000, but the insured party has the option of raising or lowering that amount. A deductible amount must also be declared. This is the amount that the insured party pays out of their own pocket before the insurance company begins compensating the insured party for their loss. A normal deductible is $500, but the insured party also has the option to raise or lower that amount.


Auto collision insurance is useful when you get into an accident. Your insurance company assesses the damage and determines the cost of repair or replacement. They then deduct your deductible. You are responsible for paying that. The balance of the damage or loss is covered up to your coverage limit. The insurance company either writes you a check for the balance or pays the repair shop directly.


The amount of the coverage limit and the amount of the deductible influence how much the insured party pays to have the auto collision insurance. These insurance "premiums" go up when a higher coverage amount or lower deductible is requested. Many people choose lower coverage amounts or higher deductibles in order to pay lower insurance premiums.


The price of the auto collision insurance is also influenced by a long list of factors including the insured party's driving record, type and age of the vehicle, and where they live and keep the vehicle. Even age, gender and marital status affect your premiums. The automobile insurance industry is very competitive with hundreds of companies vying for your business. It pays to shop around for the best auto collision insurance rates.

About the Author

Kent Ninomiya is a veteran journalist with over 23 years experience as a television news anchor, reporter and managing editor. He traveled to more than 100 countries on all seven continents, including Antarctica. Ninomiya holds a Bachelor of Arts in social sciences with emphasis in history, political science and mass communications from the University of California at Berkeley.