CarInsurance.com Insights
- Your collision deductible is what you pay out of pocket per claim — and raising it from $200 to $500 can cut collision coverage costs by 15%–30%, according to the Insurance Information Institute. A jump to $1,000 can save 40% or more.
- No state requires collision coverage, but if you have a loan or lease, your lender almost certainly does — skipping it isn’t really an option until you own the car outright.
- Filing a collision claim can raise your renewal rate, especially if you were at fault. If the other driver was uninsured or fault is disputed, the impact depends on your insurer’s guidelines.
What is a collision deductible?
The collision deductible is the amount you are responsible for out of pocket when you file a collision claim.
When purchasing collision coverage, you’ll be asked to choose a deductible. Car insurance deductibles are usually between $250 and $1,000.
Let’s say you file an accident claim for $1,500 damage to your car. and your collision deductible is $500. Your insurer will pay $1,000. You’ll pay the additional $500.
The higher your deductible, the lower your insurance premiums will be. Increasing your collision deductible from $200 to $500 can trim collision coverage costs by 15 to 30%. A hike to $1,000 can save you 40% or more, according to the Insurance Information Institute, a trade group based in New York.
When choosing a collision deductible, ensure you can afford to pay it if you must file a claim. Consumer advocates typically recommend a $500 collision deductible unless you have enough savings.
Deductibles are per incident, so you must pay the deductible every time you file a collision claim.
Is collision coverage required?
Unlike liability insurance, no state requires buying collision or comprehensive coverage.
If you have a loan or lease on your vehicle, your lender typically requires you to purchase both coverages.
The cost of collision coverage is determined by factors that include the make and model of your car, your driving record and the deductible you choose. Collision coverage on a high-end car will cost much more than an economy vehicle since it costs more to repair.
Collision coverage pays to repair or replace your car if you are:
- At fault in an accident
- Not at fault in the accident, but the other driver is an uninsured motorist
- Involved in an accident and fault is disputed
- The victim of a hit-and-run
Collision coverage also allows you to get your insurance company involved on your behalf, even when you are not at fault. If you file a claim for damage and pay your collision deductible, the insurance company will seek restitution from the at-fault party, including your deductible, in a subrogation process.
Collision coverage claims and your car insurance rates
A collision claim may increase your rates. Since collision claims are often for at-fault accidents, you can expect an increase on your next renewal. If the claim were not for an at-fault accident, the rate increase would depend on the company’s guidelines and the type of claim.
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