What Is Collision Insurance? Meaning, Coverage & How It Works

Collision insurance is a type of auto insurance which covers damage to your car caused by a collision. Regardless of who is at fault in a collision, insurers pay for the damage caused to your car if you have this type of policy.

Depending on your insurer, collision auto insurance steps in if your car crashes into another vehicle and non-vehicular objects. This policy is important, especially for newly purchased cars bought in cash or on finance, as damage repair for cars generally costs a higher amount.

It protects against out-of-pocket and higher expenses for repair work. As a car owner, read through this blog and learn about collision insurance in detail.

What is Collision Insurance?

Collision insurance adds a layer of protection for your car only against damage if your car collides with another vehicle on the road. It also provides cover for damage from collisions with non-vehicular objects such as trees, dividers, poles and other objects. Depending on your chosen insurer, this policy pays for damage, including part replacements and repairs.

Here, you may ask do I need to buy collision insurance separately for my car? Here, you must note that insurers generally do not sell this policy as a standalone plan. Instead, when you buy an own damage plan, it is included under the broader coverage of this type of car insurance policy.

If your vehicle sustains damage in a collision on slippery roads or under other conditions, this policy helps cover hefty out-of-pocket expenses, regardless of who is responsible for the damage.

How Does Collision Insurance Work in India?

If your car is damaged due to an accident, collision car insurance provides full coverage of the repair costs. Let us find out how this collision insurance actually works. For this, below is an example to familiarise you with the working of such a plan:

Suppose you are parking your car in a narrow parking space and, while doing so, you hit a nearby barrier, or another bike or car hits your vehicle from the rear. As a result of sustaining damage to your vehicle, you can claim the collision cover under your own damage policy.

Now, suppose the total repair cost goes up to 30,000. You pay the deductible, say, ₹1,000 (as your car is under 1500cc), and the remaining amount is covered by your insurer.

What Does Collision Insurance Cover?

Before you cover your car, which you purchased with your hard-earned money, with collision insurance under own damage, you must take note of what insurers cover under it. This helps avoid last-minute surprises:

Collisions

As you have understood so far, this coverage facilitates financial protection for damages due to collisions with vehicles and other non-vehicular objects on the roads. Depending on the insurer, it typically covers body and external panels, structural components, lighting and more.

 Repairs or Replacement

As you have seen in the example about repairs, an insurer also pays for replacement. Depending on policy terms, if a covered part of your car requires complete replacement, your insurer pays for it.

Roll-Over Accidents

Collision insurance generally covers damages that your vehicle sustains due to rollovers. On roads, if your car rolls over onto its roof or side, it pays for the repairs for sustained damages.

Also Read: Which Car Parts Are Covered Under Insurance?

What Is Not Covered by Collision Insurance?

There are instances where an insurer does not provide coverage as they consider those under their exclusion criteria. In collision insurance, the following are some conditions for which you do not get coverage:

Injuries

Collision car insurance does not cover injuries that a driver or passengers in a car sustain due to an accident. For this, a personal accident cover works.

Damages from Fire and natural Calamities

If an insured vehicle gets damaged due to fire or explosion, or from natural disasters like floods, earthquakes, and manmade disasters like vandalism or riots, this plan does not cover them. However, a broader own damage plan or comprehensive insurance covers these.

Third-Party Damage

This plan also does not cover accidental third-party damages, injury, or fatalities. Here, a mandatory third-party liability policy steps in.

Collision Insurance vs Comprehensive Insurance: What are the Differences?

While purchasing an efficient insurance coverage plan for your car, learn the differences between these two in terms of coverage scope:

How to Claim Collision Coverage?

The following are the steps that you must follow to claim for damages if your car is involved in a collision and sustains damage:

Step 1: Immediately inform your insurer about the collision through their dedicated mobile application and helpline number. Communicate the nature of the incident accurately.

Step 2: Capture photos or record videos on the spot and, if necessary, file an FIR.

Step 3: Get your damaged vehicle inspected by a surveyor that your insurer assigns.

Step 4: Fill out a claim form, attach original policy documents, vehicle RC, and a copy of the FIR (if filed).

Step 5: Your insurer will assess your claim and approve it. After approval, get your vehicle repaired at their cashless garage, where your insurer settles the repair or replacement costs directly with the garage.

Also Read: Lock in Your Car’s Right Value with Car Insurance IDV Calculator

When Is Collision Coverage Recommended?

As you have understood the collision insurance meaning, and its working, you must decide whether you may need it or not. For a better understanding, the following are some instances where it may seem important:

1. Owning a New or Luxury Car: Collision damage to your new car, or, if it falls into the luxury category, the repair may cost a lot. Here, this insurance may come in handy.
2. New drivers: A new driver may lack the expertise to avoid collisions, which may result in damage. For such car owners, this insurance plan secures against financial losses.
3. Car Owners Driving through Congestion: Car owners or drivers who regularly drive through congested traffic may find this coverage suitable, as the chances of unanticipated collisions can be higher.

Pros and Cons of Collision Insurance

Like every other insurance product, collision insurance also has advantages and disadvantages:

Pros of Collision Insurance

The following are some benefits that collision insurance brings you as an owner of a car:

Brings Peace of Mind

Collisions do not always happen due to the fault of a car owner but due to recklessness or mistakes by others. In such situations, collision insurance ensures you stay stress-free and without worrying about the financial impact if your car is involved in an accident.

Meet Lender’s Requirement for Collision Insurance

If you are planning to lease or finance your car, you will most likely be required to have collision insurance from your lender. This helps to safeguard their investment if your car is damaged. Thus, go through the contract carefully to meet the lender's requirements.

Provides Coverage of Many Types of Damage

Apart from car-to-car accidents, collision insurance covers something more. It provides coverage for damage from hitting walls, potholes, poles, and other road hazards. As you have seen earlier, it also covers damage if your car is flipped after a collision. Thus, choosing this insurance ensures effective protection against collisions.

Cons of Collision Insurance

The following are some drawbacks that a collision insurance policy has that you must stay aware of:

Excludes All Damage Costs

Choosing collision coverage for car insurance is wise. As you have noted, its exclusions mean you do not get coverage for damages due to fire, weather conditions, natural disasters, vandalism, etc., which leads to the purchase of a comprehensive car insurance policy.

Having an Older Car

If your car is older, a claim from this insurance may not result in an optimised payout. Due to its age, the payout may be even less than the policy’s cost.

Increases Overall Expenses

In case of having an older car or a vehicle with not much worth left, having this plan only increases your overall premium expenses.

Factors to Consider Before Choosing Collision Coverage

Here are the things to consider while planning to buy car insurance with collision coverage:

Assess Coverage Needs

Assess the current market valuation of your car and coverage requirements before opting for this coverage. Consider reviewing the inclusions and exclusions and ensure that it protects you against potential collision-related incidents. While you assess these, understand whether its benefits are worth paying an additional premium.

Select Deductibles and IDV

Focusing on expenses, the Insured Declared Value (IDV) and deductibles play crucial roles in determining overall insurance costs. As you have assessed the present valuation of your car, choose an IDV accordingly. Opt for voluntary deductibles(if applicable) suiting your financial capacity.

Network Garage Proximity

While buying this policy from an insurer, ensure that their network or cashless garages are in your proximity. This helps with a quick cashless settlement rather than opting for a reimbursement claim from a non-network garage.

Also Read: How to Pay Vehicle Insurance Online?

Bottom Line

Collision car insurance protects you financially in the event of a collision. It also helps manage repair costs if a collision occurs. Familiarising yourself with this insurance makes it easier to make an informed decision.

For complete, reliable protection, explore car insurance policies from Bajaj General Insurance. Explore policies today and drive your vehicle with confidence and peace of mind.

Frequently Asked Questions

What does collision insurance cover in India?

Collision insurance in India covers expenses for damage that your car sustains as it collides with vehicles or non-vehicular objects like trees, walls, poles, etc on roads.

Is collision insurance mandatory by law?

No, Indian law does not mandate collision insurance. But a lender might require this insurance if you take out a car loan.

Will I get collision insurance coverage if someone hits my car?

Yes. Collision insurance covers the cost of repairing or replacing a car’s parts after it is hit by another vehicle, regardless of the party at fault.

If there is no comprehensive cover, will I get collision insurance?

Yes, even if there is no comprehensive cover, you will get collision insurance. But the majority of insurers suggest a combination of the two for full protection.

Does collision insurance provide coverage for natural disasters like floods?

No, collision insurance usually doesn't provide coverage for natural disasters such as earthquakes, floods, and typhoons.

Who benefits the most from collision insurance?

Drivers possessing new cars under lease or financing benefit the most from collision insurance. This is because extensive repairs to these vehicles usually cost quite a lot.

What does collision insurance usually cover in a single-car accident?

In any single-car accident, collision insurance usually covers the damage caused to your car due to a crash with another object, such as a tree or fence.

What is the difference between collision insurance and comprehensive car insurance?

Collision insurance covers damage sustained by your car due to a collision. Comprehensive insurance covers damages due to fire, explosions, and eligible manmade or natural disasters.

Is collision coverage available as a separate policy in India?

Depending on insurers, this type of policy is generally offered with a standalone own damage cover.

*Standard T&C Apply

*Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.