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How do I know if it’s a collision or liability claim?


Question: I backed into a car. There weren’t any injuries, just damage to the other person’s car. Would this be covered by liability or collision?  It sounds like collision to me.  

Answer:  It’s true your accident, by definition, was a collision, because your vehicle collided with another vehicle; however, the other party would make a claim under your property damage liability coverage for their vehicle’s damages, and you would make a claim under your collision coverage for your car’s damages.

Both property damage liability and collision insurance pay for damages to cars damaged in an auto accident but are claimed differently.

Your liability coverages -- property damage and bodily injury -- can be claimed against by others whom you harm when you are at fault for an accident, like the person you backed into. You cannot use these coverages for yourself or your car.

Your collision insurance coverage is different from your property damage liability coverage because it covers your car for damages it receives when it hits, or is hit by, another vehicle or object, regardless of fault.

So, you can file a claim against your collision coverage for any damages your own car sustained when you backed into the other vehicle. The other driver cannot claim against your collision coverage, since it only covers your insured car and not his.

Collision also differs from property damage coverage because it comes with a deductible.  A deductible is the amount of you must pay out of pocket before your insurance benefits kick in.

Thus, if your car’s damages are $1,000 and your deductible is $500, your collision coverage will only pay $500 toward the cost of repairs -- and only after you first pay out your $500.  (See "How much will raising your deductible will save you?") 

Your car insurance company will pay for the other party’s repairs through your liability coverage without a deductible being due.

With this type of minor accident, you may find that you won’t need to make a collision claim because the repair costs don’t reach your deductible amount.  Unfortunately, because another car was damaged and the car owner will claim against your policy, your future claims history report will show this accident, which may cause your future rates to rise.

If you receive notice that your rates will rise, take that as an opportunity to shop around for the cheaper car insurance rates.  Your auto insurer may rate on this minor accident, while others won’t (or at least not surcharge as much for it), so shopping around may save your hundreds, or more, a year on your auto insurance.

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