What Is Collision Insurance and What Does It Cover?

Collision insurance is often optional for drivers, but there are many good reasons to include it in your policy.

Frustrated businessman standing next to car wrecked on guardrail
(Image credit: Getty Images)

Collision insurance is coverage that protects you and only you. This type of auto insurance helps to pay for the repair or replacement of your car if it's damaged in an accident with another vehicle or object, such as a fence or a tree. If you're leasing or financing your car, collision coverage is typically required by the lender. If your car is paid off, collision is an optional coverage on your car insurance policy. 

So, if it’s optional — should you buy the coverage? Although car insurance rates have skyrocketed this year, so has the cost to buy a new or used car. Unless you are driving a junker, you should give it some consideration. You should also pay attention to the value of your car as the years pass. After a certain point, the coverage doesn't provide the same level of protection it did when your car was new. If you keep a car longer than five or six years or if it has more than 100,000 miles on the odometer, at some point, the costs will outweigh the benefits. 

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Donna LeValley
Personal Finance Writer

Donna joined Kiplinger as a personal finance writer in 2023. She spent more than a decade as the contributing editor of J.K.Lasser's Your Income Tax Guide and edited state specific legal treatises at ALM Media. She has shared her expertise as a guest on Bloomberg, CNN, Fox, NPR, CNBC and many other media outlets around the nation.