How Much Collision Coverage Do I Need?

Last Updated on February 5, 2026

Collision coverage helps pay to repair or replace your vehicle after a crash with another vehicle or object, or if you roll over. It’s optional under state auto insurance laws, but it’s commonly required by lenders and lessors until your loan is paid off or your lease ends.

You don’t pick a “coverage amount” for collision the way you do with liability. Instead, collision is typically limited by your car’s value, and you choose a deductible (your share of the claim). Your real decision is whether collision still makes financial sense for your car—and if so, what deductible fits your budget.

Collision “Limits” Follow Your Car’s Value: You’re generally covered up to your vehicle’s ACV, and your deductible is subtracted from what the insurer pays.
Your Deductible Is the Real Knob to Turn: Raising a deductible can lower premium without dropping protection—just make sure you can pay it after a crash.
Loans and Leases Usually Require It: If you finance or lease, collision is commonly mandatory and your lender may restrict deductible choices.
Do the Math Before You Drop It: Compare annual collision cost to your potential benefit (ACV minus deductible) and your ability to self-insure repairs.

Table Of Contents

What Collision Coverage Pays For
Collision vs. Comprehensive at a Glance
How Much Collision Coverage Do You Need?
When It Makes Sense to Drop Collision Coverage
When You Should Keep Collision Coverage
Quick Collision Decision Checklist
Bottom Line
FAQs on Collision Coverage Needs

What Collision Coverage Pays For

Collision generally pays for damage to your car after:

Hitting another vehicle
Hitting an object (guardrail, curb, pole, fence, etc.)
Single-car crashes like rollovers (and, in many policies, pothole damage)

Collision typically pays up to your vehicle’s value (not what you originally paid for it), minus your deductible. For a plain-English overview of collision vs. comprehensive, see the Insurance Information Institute’s consumer guide: what collision and comprehensive cover.

Collision usually does not cover theft, hail, flood, fire, vandalism, or animal strikes—those are commonly handled under comprehensive (sometimes called “other than collision”). Medical bills and injuries are handled under separate coverages (like MedPay, PIP, or bodily injury liability), depending on your policy and state rules.

Collision vs. Comprehensive at a Glance

Coverage	What It Typically Covers	Common Examples
Collision	Crash damage to your vehicle (vehicle, object, rollover)	Backing into a pole, sliding into a guardrail, at-fault accident damage to your car
Comprehensive	Non-crash damage to your vehicle	Theft, hail, vandalism, falling objects, fire, flood, animal strike

Quick tip: If you’re only trying to save money, raising your collision deductible often reduces premium without removing the protection entirely—especially on newer cars where a single repair can be expensive.

How Much Collision Coverage Do You Need?

Collision coverage is typically tied to your car’s value, so your “amount” is effectively your vehicle’s actual cash value (ACV) minus your deductible. The decision comes down to three questions:

What would my insurer likely pay if my car were totaled today?
How much premium am I paying for collision?
Could I comfortably pay for repairs (or replace the car) out of pocket?

Step 1: Estimate Your Car’s Actual Cash Value

Your ACV is your vehicle’s market value immediately before the loss, factoring in depreciation and condition. Start by estimating value using a few reputable tools, then average the results:

If you want a deeper explanation of how ACV is determined and what can affect the payout, see: how to find the actual cash value of your car.

Step 2: Choose a Deductible You Can Actually Pay

Your deductible is the portion you pay on a covered collision claim. Higher deductibles usually mean lower premiums, but more out-of-pocket cost when something happens. (If you want a full walkthrough, here’s a guide to how car insurance deductibles work.)

Many drivers see common deductible options like $250, $500, and $1,000 (availability varies by insurer and state). Use this table as a practical way to match a deductible to your finances:

Deductible Choice	Premium Impact	Best Fit For
$250	Typically higher premium	Drivers who want lower out-of-pocket risk and can afford the monthly cost
$500	Often a balanced option	Drivers who can handle a moderate repair bill without stress
$1,000	Typically lower premium	Drivers with savings set aside for repairs who prefer lower monthly cost

Step 3: If You Finance or Lease, Your Options May Be Limited

If you have a loan or lease, your contract typically requires you to carry both comprehensive and collision. Many lenders also set rules like a maximum deductible (for example, they may cap it at $1,000), and they may require you to list them as the lienholder. Always check your loan or lease paperwork before changing coverage.

Step 4: Compare What You Pay vs. What You Could Collect

A simple way to decide whether collision still makes sense is to compare:

Your annual collision cost (the collision portion of your premium), and
Your maximum realistic benefit (estimated ACV minus your deductible).

Example (for illustration only): If your car’s ACV is $9,000 and your deductible is $1,000, the most collision could pay in a total-loss scenario is roughly $8,000. If you’re paying $900/year for collision, you’re paying about 11% of the potential payout each year—before you even have a claim.

There’s no universal cutoff, but when the annual cost starts to feel “high” compared to what you could actually receive after the deductible, that’s a sign to reevaluate.

When It Makes Sense to Drop Collision Coverage

Dropping collision is most common when your car is paid off and has relatively low market value—especially if you have savings you can use to repair or replace it. You may be a good candidate to drop collision if:

Your car’s value is low enough that a collision payout wouldn’t meaningfully change your finances after the deductible
Your collision premium feels expensive relative to your car’s current value
You could replace the car (or pay for a major repair) without taking on high-interest debt
You drive infrequently or mostly in low-risk situations

If you’re weighing the numbers on an older vehicle, start here: should you drop collision coverage on an older car?

When You Should Keep Collision Coverage

Collision is often worth keeping when a crash would create a major financial setback. Consider keeping collision if:

You’re financing or leasing your vehicle (required in most contracts)
Your vehicle is newer or still worth enough that replacing it would be difficult
You have a long commute, drive in heavy traffic, or frequently park in tight/high-traffic areas
Your vehicle is costly to repair (many luxury models, hybrids, and EVs can have higher parts and labor costs)
You don’t have an emergency fund that could absorb a big repair bill

Quick Collision Decision Checklist

If This Is True…	Collision Usually Makes Sense	Collision Is Often Optional
You have a loan/lease	Yes (required by contract)	No (rarely allowed)
You could not replace the car easily	Yes	Maybe
Your deductible is manageable from savings	Yes	Maybe
Annual collision cost feels high vs. ACV − deductible	Maybe (raise deductible or re-quote)	Often yes (consider dropping)
You drive rarely and can self-insure repairs	Maybe	Often yes

Bottom Line

You don’t choose a set “amount” of collision coverage. In most policies, the practical limit is your car’s value (ACV), and your main lever is the deductible. If you’d struggle to repair or replace your car after a crash, collision is usually worth keeping. If the car is low-value and you can comfortably self-insure, dropping collision can be a reasonable way to cut premium—especially once the vehicle is paid off.

Note: Coverage details, deductibles, and claim rules vary by state and insurer. Always review your declarations page and policy language before making changes.

FAQs on Collision Coverage Needs

Is collision coverage required by law?

Usually no. Collision coverage is generally optional under state auto insurance laws, but it’s commonly required by lenders and lessors until your loan is paid off or your lease ends.

What is the difference between collision and comprehensive?

Collision typically covers crash damage to your vehicle (hitting a car/object or rollover). Comprehensive typically covers non-crash damage like theft, hail, vandalism, fire, flood, or animal strikes. Exact coverage depends on your policy wording and state.

How does a collision deductible work?

If you file a covered collision claim, you pay the deductible amount and the insurer pays the remaining covered cost up to the vehicle’s value. Deductibles are applied per claim in most policies, so choosing a deductible should match what you can pay on short notice.

Does collision coverage pay if the accident is my fault?

In many cases, yes. Collision is designed to cover your vehicle’s crash damage regardless of fault, as long as the loss is covered and the policy is active. (Your liability coverage is what pays for damage or injuries you cause to others.)

Should I keep collision on an older car that’s paid off?

It depends on the car’s current value, your collision premium, and whether you could comfortably pay for repairs or replacement out of pocket. If the potential payout after the deductible wouldn’t meaningfully help you financially, dropping collision can make sense.

Will filing a collision claim raise my insurance rates?

It can. Rate impact depends on fault, claim history, your insurer’s rules, and state regulations. If you’re unsure whether to file, ask your insurer how claims are handled and whether an estimate can be reviewed before you proceed (processes vary).

Does collision coverage replace my car with a new one?

Typically no. Most collision claims are settled based on actual cash value (market value) for a total loss, not the cost of a brand-new replacement. Some insurers offer optional endorsements that can change how a total loss is settled, depending on state and eligibility.

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