Collision Insurance Insights for 2024

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Collision Insurance: What You Need to Know in 2024

Estimated reading time: 8 minutes

  • Collision insurance protects your vehicle regardless of fault and is often required for financed cars.
  • Technological advances in modern vehicles are increasing repair costs, impacting collision insurance premiums.
  • Smart shopping, including comparing quotes and adjusting deductibles, can help lower your collision insurance costs.
  • Consider your vehicle’s value and personal risk tolerance annually to decide if collision coverage remains worthwhile.
  • Special considerations apply for electric and hybrid vehicles, affecting repair complexity and insurance pricing.

Table of Contents

What Is Collision Insurance?

Collision insurance is a specific type of auto insurance coverage designed to pay for repairs or replacement of your vehicle if it sustains damage in an accident — regardless of who caused the collision. Unlike liability insurance (which covers damage to others), collision insurance focuses solely on your vehicle. It is typically bundled within a full coverage auto insurance policy, which commonly includes liability, comprehensive, and uninsured motorist coverage.

Why Is Collision Insurance Important?

  • Protects your investment: Vehicles are a significant financial investment. Collision insurance helps ensure that repair costs or vehicle replacement do not become an overwhelming financial burden.
  • Covers at-fault and no-fault accidents: Whether you are responsible for the accident or not, collision coverage pays for the repairs to your car.
  • Required by lenders: If you finance or lease a vehicle, collision insurance is often mandatory until the vehicle is paid off.

The insurance landscape, including collision coverage, is experiencing a series of transformations influenced by evolving technology and market dynamics. Here are some key trends and insights based on recent industry research:

Rising Repair Costs Due to Vehicle Complexity

Modern vehicles are more technologically advanced than ever, featuring intricate systems such as:

  • Advanced driver assistance systems (ADAS)
  • Electric and hybrid powertrains
  • Sophisticated electronics and sensors

Though these technologies improve safety, they also increase repair complexity and expenses. Damage to critical sensors or battery packs in electric vehicles, for example, can significantly raise collision repair bills.

According to a recent report by CCC Intelligent Solutions, the increased complexity and higher parts costs are pushing total loss (vehicle deemed irreparable) frequencies upward. However, repair cycle times are also improving as body shops invest in training and equipment adapted to new vehicle technologies — enabling faster and more efficient repairs.

Impact of Electric and Hybrid Vehicles

The rise in electric and hybrid vehicle sales is a game changer for collision insurance. These vehicles:

  • Often have higher parts and repair costs
  • Require specialized repair skills and facilities
  • May dictate different claim handling procedures in insurance policies

As a result, collision coverage pricing is evolving to accommodate these cost structures, impacting premiums for electric and hybrid vehicle owners.

Changing Consumer Behavior and Insurance Costs

Data shows that collision insurance premiums vary widely, with the average full coverage auto policy costing around $165 per month in the U.S. Quote.com. However, savvy consumers can lower costs by:

  • Choosing higher deductibles (the amount paid out of pocket before insurance kicks in)
  • Comparing quotes from multiple insurers

Notably, USAA continues to offer some of the lowest collision insurance rates, averaging about $120/month, reflecting their strong reputation for customer satisfaction and tailored coverage options.

Considering When to Drop Collision Coverage

An important practical consideration for many vehicle owners is when collision insurance becomes less cost-effective. Older vehicles often have a low market value compared to the cost of collision coverage. In such cases, dropping collision coverage may save money without exposing you to disproportionate risk.

However, it’s essential to carefully weigh the potential out-of-pocket repair expenses against premium savings before making this decision. WalletHub advises reviewing yearly whether collision insurance aligns with your current vehicle value and personal risk tolerance.

How to Find the Best Collision Insurance Deals

At Best Insurance Price, our mission is to help you navigate insurance options with confidence. Here are actionable tips to secure the best collision insurance policies:

1. Shop Around and Compare Quotes

Collision insurance rates vary significantly between insurers due to underwriting criteria, geographic factors, and partnerships with repair shops. Use comparison tools to evaluate options across multiple providers.

2. Opt for Higher Deductibles

Raising your deductible (e.g., from $500 to $1,000) can substantially lower your monthly premiums. Just ensure you have sufficient savings to cover these out-of-pocket expenses in case of an accident.

3. Leverage Discounts

Some insurers offer discounts for:

  • Safe driving records
  • Bundling collision with other insurance policies (home, life)
  • Paying premiums annually instead of monthly
  • Installing safety devices or telematics devices

4. Review Your Vehicle’s Value Annually

As your vehicle depreciates, reassess whether maintaining collision coverage remains financially prudent.

5. Understand Policy Terms Thoroughly

Know what your policy covers and any exclusions, such as coverage for modifications, wear and tear, or specific parts.

How Best Insurance Price Helps You

With our deep industry experience and access to current market data, Best Insurance Price stands out in assisting customers to find collision insurance that delivers value and peace of mind. Our expertise includes:

  • Tailoring insurance recommendations based on vehicle type, usage, and personal risk factors
  • Educating customers on the evolving insurance landscape, including electric vehicle coverage nuances
  • Encouraging cost-saving strategies without compromising necessary protection

Explore our detailed resources and guides to empower you further:

Final Takeaways: Should You Get Collision Insurance?

  • Collision insurance offers essential protection if your vehicle is relatively new or financed.
  • Technological advancements in vehicles are increasing repair costs, reinforcing the value of comprehensive collision coverage.
  • Evaluate your budget, vehicle value, and risk tolerance regularly to decide whether to keep, adjust, or drop collision insurance.
  • Shop smart by comparing quotes, opting for higher deductibles, and leveraging discounts to mitigate premium costs.

This article is intended for informational purposes only and does not constitute professional insurance advice. Individual insurance needs and options vary based on many factors. Always consult a licensed insurance professional or advisor before making any decisions related to your insurance coverage.

Frequently Asked Questions

What does collision insurance cover?

Is collision insurance required by law?

When should I consider dropping collision insurance?

How can I save money on collision insurance?

Do electric vehicles have higher collision insurance premiums?