Using Collision Coverage for Vehicle Damage

Even when you are to blame for a car accident, you may be able to get your damaged car repaired or replaced if you carry collision coverage as part of your car insurance policy.

Collision coverage (also called "car damage coverage") allows you to make a claim with your own insurance company to pay for repairs to your vehicle, no matter who was at fault for the accident.

Your Coverage or the Other Driver's Coverage (Not Both)

You can file a vehicle damage claim under your own collision coverage or file a third-party claim against the at-fault driver, but you can't collect compensation from both sources for the same losses.

Once you settle a claim under your own collision ­coverage, you give up your right to collect that amount from the other driver's insurance for the same property damage.

If you collect from your own insurance company, you may have to sign a Right of Subrogation, which allows your insurer to seek reimbursement from the other driver, that driver's insurance company, and anyone else liable for the accident.

How It Works

Let's say you're in a car accident with Joseph Blau, who is insured by the Incidental Insurance Company. You are injured in the accident, and your car sustains $3,000 worth of damage. You file a third-party claim against Incidental for injuries to you, and for damages to your car.

Incidental argues that the accident was at least half your fault, so it offers only $1,500 for your car damage. You believe that you can show that Joseph was completely at fault, but it will take several weeks to get what you hope will be a helpful police report and a statement from a witness who will confirm what happened.

You have $5,000 worth of collision coverage with your own insurer, the New Age Insurance Company. If you don't want to wait to get paid by Incidental, or if you don't think you'll get the full $3,000 from Incidental, you can file a claim with New Age. Collision coverage pays regardless of fault, so New Age must pay you the full $3,000 minus any deductible.

If you collect from New Age, you give up your right to collect property damage from Incidental—except reimbursement for your deductible. After paying you, New Age will try to collect from Incidental, but its success or failure in doing so will not affect your right to keep the money you've collected from New Age.

Personal Injury Claims Are Different

Nothing you do under your own collision coverage affects your right to pursue a personal injury claim against the other driver's insurance company. You are free to go after the other driver's insurance company for any injuries and lost income resulting from the crash.

Advantages of Using Your Collision Coverage

There are two main advantages to using your own collision coverage rather than filing a third-party claim.

First, you'll probably get a check from your own insurance company more quickly. Collision coverage pays regardless of fault. But insurers only pay third-party claims when an investigation proves that the insured party was to blame for the accident. Investigations take time. You may have to wait for a police accident report or for an insurance adjuster to contact a witness before you can show the other driver's fault. Or the other insurance company may simply stall to see whether you will give in on the question of fault.

Second, if you also have a third-party personal injury claim, you may not want to talk to the other driver's ­car insurance company until you have fully investigated the matter. Until you are certain about the facts and your arguments, it is dangerous to ­discuss details of the accident with anyone on the "other side."

The struggle over who was at fault does not come up under your own collision coverage, and so these delays in paying out don't happen as often. Your own insurance company must reimburse you immediately after you've followed its rules regarding inspection and estimates and you have agreed on a repair option.

Disadvantages of Using Your Collision Coverage

If you collect a claim under your own collision coverage, you are limited to the amount of cov­erage listed in the policy. If the collision coverage policy limit is less than the cost of repairing your vehicle, you will have to come up with the rest of the repair costs out of your own pocket unless you settle a claim against the other driver's insurance.

You may also be limited in what you can collect for items that were inside your car—like clothing, luggage, or sound equipment that is not permanently installed—and temporary replacement property, such as a rental car if your car can no longer be driven.

In addition, the compensation you collect ­under your collision coverage will be reduced by your collision coverage deductible. If the deductible is large and you need the amount to pay for repairs, this can present an added problem in getting your car repaired. For example, most people carry a deductible amount of $500 to $2,000 on their collision coverage. If repairs to your car cost $5,000 and you have a $1,000 deductible, your insurance coverage will pay you $4,000, and you must come up with the other $1,000 out of your own pocket.

Another disadvantage is that the rules set by your insurance policy for processing a claim under your collision coverage may be more ­restrictive than the process of a third-party claim. For example, your collision coverage may require more bothersome inspections of the car and estimates of the work before you can get approval for repairs. By contrast, the other driver's insurance company has no right to enforce any such specific rules during the course of your claim. That's ­because your right to compensation from another driver's insurance arises from the other driver's fault and not from a contract between you and the insurance company.

Finally, car insurance rates typically go up after an accident that results in damage. Whether your rate increases after an accident depends on factors like the cost of the claim, your driving record, and which driver was at fault for the accident.

For more information on insurance coverage after a car accident, and every tip you'll need to navigate your car accident case, get How to Win Your Personal Injury Claim by Joseph L. Matthews (Nolo).