Using Collision Coverage for Vehicle Damage

Using your own collision coverage to get your car back on the road after an accident.

Even if you were completely at fault for a car accident, you may be able to collect compensation for damage to your vehicle if you carry collision coverage in your own auto insurance policy. Also called "car damage coverage," collision coverage allows you to make a claim with your own insurance company to pay for repairs to your car regardless of who was at fault for the accident. You can file and collect on your collision claim even though you are still negotiating the question of who was at fault in a third-party claim for ­injuries with another person’s insurance company.

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

You can file a claim for your property damage under your own collision coverage or under a third-party claim against the other driver, but you cannot collect full compensation from both. 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, your company takes over your right to file a damage claim against the other driver’s insurance.

How It Works: For example, 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 accident report, and the witness who will corroborate what happened is away on a monthlong vacation.

You have $5,000 worth of collision coverage with your own insurer, the New Age Insurance Company. If you do not want to wait to get paid by Incidental, or if you aren’t sure Incidental is going to agree that Joseph was at fault and believe it might not pay the full $3,000, 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 for your deductible amount. After paying you, New Age will try to get reimbursed by Incidental, but its success or failure in doing so will not affect your right to keep the full $3,000, minus the deductible, you have 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 personal injuries and lost income. You are also free to ­collect whatever property damage your own collision coverage did not pay for, such as your deductible (see below) and any uncovered equipment or property.

Advantages of Using Your Collision Coverage

There are two main advantages to claiming property damage under the collision coverage of your own policy rather than in a third-party claim.

First, your own coverage is likely to settle with you more quickly. This is because collision coverage pays regardless of fault. A third-party claim is paid only if the other party’s fault is shown, and that often takes some time if the other insurance company disputes the degree to which its insured was responsible for the accident. You may have to wait for a police accident report or to contact a witness before you can fully ­demonstrate 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 simply may not want to discuss the question of fault with the other person’s ­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 investigators.

The struggle over who was at fault does not come up under your own collision coverage, and so these delays in paying out do not occur. Your own insurance company must reimburse you immediately after you have complied with its rules regarding inspection and estimates and you have agreed on a repair amount.

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 the 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. Also, unlike a third-party claim, your policy may restrict the amount you can ­collect for items that were inside your vehicle -- for ­example, clothing, luggage, or sound equipment that is not permanently installed -- and on rental car and other replacement transportation costs.

In addition, the compensation you collect ­under your collision coverage will be reduced by the amount specified in your policy as the 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 any agreement between you and the insurance company.

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

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