Will Car Insurance Cover Repairs if You Are at Fault?

Does Car Insurance Cover You When It's Your Fault?

Car insurance covers repairs to your car in an accident that's your fault as long as you carry collision coverage. This coverage kicks in when your car is damaged in a wreck involving another vehicle or an object, such as a tree or utility pole. It also might cover an accident, such as rolling your car on a slippery road, that doesn't involve another vehicle or an object.

Typically, collision coverage is optional. However, when your car is leased or financed, the dealership or lender might insist that you purchase collision coverage.

Without collision coverage, you may be forced to cover the cost of fixing or replacing your car.

Two components of collision coverage that are important to understand are deductibles and coverage limits.

Deductibles

Collision coverage generally comes with a deductible ranging from $250 to $1,000. A higher deductible normally results in a lower premium. If you file a claim to cover costs associated with an at-fault accident, your insurer will subtract the deductible from your payout.

Let's say your insurer agrees to provide $7,000 to cover damage to your car caused by an at-fault crash. The insurance company will subtract the amount of the deductible from the payout. In this scenario, if your collision deductible is $500, you'd receive $6,500 ($7,000 - $500) for car repairs. You'd pay the $500 deductible out of pocket.

Coverage Limits

The other aspect of collision coverage that's critical to understand is coverage limits.

A coverage limit is the most that a car insurer will pay out for your claim. The limit for collision coverage normally equals the actual cash value of your car, which takes into account the depreciated value of the car over time. Unlike other kinds of coverage, the coverage limit for collision insurance isn't a set amount.

Because collision insurance covers the actual cash value of your car and not the replacement cost, you may need to come up with some of your own money if you'd like to buy a newer, more expensive vehicle to replace one that's been totaled.

Keep in mind that under your collision coverage, if you're the at-fault driver, another driver's insurance company might seek reimbursement from your insurance company for the payout made to its policyholder. This maneuver is known as a subrogation claim.

How Do Claims Work in a No-Fault State?

If you live in a no-fault state, car insurance claims don't work the same as they do in at-fault states.

In a no-fault state, you file a claim with your insurance company if you have been injured in a car accident and are hit with medical bills. The other driver or drivers do the same. This is regardless of who caused the accident.

In most no-fault states, drivers must carry no-fault insurance, also known as personal injury protection (PIP). This helps cover your medical expenses when you're injured in a no-fault accident.

No-Fault States

There are 12 states with some form of no-fault car insurance.

Here's a list of the states with "pure" or "true" no-fault car insurance:

• Florida
• Hawaii
• Kansas
• Massachusetts
• Michigan
• Minnesota
• New York
• North Dakota
• Utah

Three other states offer no-fault coverage as an option:

• Kentucky
• New Jersey
• Pennsylvania

How Much Does Insurance Go up After an Accident?

Your driving record is one of the factors that insurers use to figure out how much you'll pay for car insurance. So, if you've been involved in an accident that shows up on your driving record, your car insurance premium might rise—even if the accident wasn't your fault.

Another factor that insurers weigh when setting your car insurance rates is your claim history. So, if you wind up filing a claim to cover damage or injuries caused in an accident, your insurer will take that into account.

When it comes to your premiums, it might not even matter whether you caused the accident. Why? Because the company might consider you a riskier driver—even if an accident wasn't your fault—and your premiums might increase.

The Bottom Line

Collision coverage can be worth the investment if your car sustains damage in an accident or you suffer injuries. This is especially true if the accident was your fault. That's because an insurer typically won't cover your claim for an at-fault accident with no collision insurance, which typically is optional unless you financed or leased your car. Without collision coverage, an at-fault accident could lead to a pile of repair bills, medical bills or both that you must pay out of your own pocket.

If you're looking to adjust your coverage or are on the hunt for a new car insurance company, Experian's car insurance comparison tool can help. You'll receive quotes from top insurers all in one place, making it easier to find the best deal.