Texas Collision Insurance Guide

Your car, not theirs

The Insurance Information Institute says state liability laws pay for damage you cause to other vehicles. They do not pay for damage to your own car. Collision is the optional coverage that does. The Institute’s basic auto article says it pays for damage to your car from a collision with another car, an object such as a tree or a telephone pole, a rollover, or a pothole. A collision with a deer is comprehensive, not collision. Comprehensive is the other physical-damage coverage, for theft and for causes other than a collision, such as hail, flood, fire, and vandalism. We are not writing that page here. The label matters because the deductibles are often different and a deer in the road is not a “crash” on the collision line.

The Institute’s basics article describes collision as reimbursing you when you are at fault. The basic-auto article says the coverage reimburses you even if you are at fault, minus the deductible. Both are pointing at the same purchase: you can use your own collision coverage without winning the fault argument first. If you are not at fault, the Institute says your company may try to recover what it paid from the other driver’s insurer and, if that works, reimburse the deductible too. Fault decides who should have paid. Collision decides whether your car gets fixed while that argument continues.

The National Association of Insurance Commissioners describes collision as paying for damage to the insured vehicle from hitting another car or an object. It says collision and comprehensive are not required by state law, and that lenders may require them on a financed or leased vehicle. That matches TDI’s guide: if you still owe money on the car, the lender will require collision and comprehensive. Owning the car free and clear makes collision a choice. Owing on the car makes it a loan condition. If you drop it, TDI says the lender can buy single-interest coverage, add the cost to the loan, and protect only the lender.

The deductible is real money

TDI’s guide uses a plain example. On a $1,500 collision claim with a $500 collision deductible, the company deducts $500 and pays $1,000. You must pay a deductible for collision, comprehensive, and uninsured or underinsured motorist claims. You do not pay a deductible for a claim against the other driver’s insurance company. If their company accepts fault and pays your shop, the deductible on your collision coverage never enters the math. If you file on your own policy because their company will not pay, or because their limit is too small, TDI says you pay your deductible. Your company may then try to recover that money from the at-fault driver through subrogation.

The Institute says deductibles are typically $500 or $1,000, and that a higher deductible lowers the premium. Pick a number you can pay in the week of the crash, not a number that only looks good on the quote. Collision and comprehensive deductibles are separate. A low comprehensive deductible for a hailstorm does not set the collision deductible for a crash. Read both.

TDI also draws a line people miss. Liability and several other coverages have dollar limits, the most the company will pay. Collision and comprehensive do not have dollar limits in that sense. The cap is the car’s actual cash value, not a $25,000 property-damage ceiling. You still cannot collect more than the car is worth. “No dollar limit” does not mean a new car.

Actual cash value, parts, and the shop

TDI defines actual cash value as the cost to replace the car minus depreciation for wear, tear, or age. The company pays for repairs or replacement only up to that value. If the car is ten years old, the settlement is the value of a ten-year-old car, not a new one of the same model. You can negotiate. TDI says a company might raise an offer if you show the car would sell for more, using written quotes for a similar car from dealers or local listings.

TDI says the company pays for parts of like kind and quality, not necessarily original manufacturer parts. It may offer preferred shops. It cannot require you to use one. If hidden damage shows up, you or the shop can ask the adjuster to raise the estimate.

If you disagree on the amount, TDI describes appraisal for disputes with your own company, not with the other driver’s company. You and the company each hire an appraiser. Those two pick an umpire. If the appraisers disagree, the umpire decides, and that decision binds both sides. You pay your appraiser and half the umpire’s cost. Appraisal is about the amount. It is not a second trial about who caused the crash.

A total loss and the loan

If repairs approach the car’s current value, TDI says the company might total it and pay you to replace it rather than fix it. The payment is value minus depreciation. If you want to keep the car, the company subtracts salvage value from the settlement. A nonrepairable title cannot be retitled or registered. Read that before you keep a car you cannot put back on the road.

If you still owe more than the car is worth, the total-loss check can be short of the loan. TDI says that gap is why dealers and lenders offer guaranteed auto protection, or gap insurance. The Institute makes the same point from the market side: collision and comprehensive cover market value, not what you paid, and new cars depreciate quickly. Gap pays the difference between what you owe and the insurance. On a lease, the Institute says gap is usually rolled into the lease payments. Ask whether you already have it before you buy it twice.

The Institute’s how-much article says you do not pick a collision “limit” the way you pick a liability limit. The coverage reflects the market value of the car and the cost of repairing it. Your choice is the deductible, and whether to buy the coverage at all when no lender is requiring it. An old car worth less than the deductible plus a year of premium is a math problem, not a slogan. We will not invent a cutoff dollar amount. Compare the premium, the deductible, and what the car would sell for today.

Using collision when the other company stalls

TDI’s guide is specific. If you believe the other driver was at fault and their company will not pay, file with your own company. You must have collision to do that. Your company will probably try to collect from theirs. You pay the deductible. If the other driver’s limits are too low to fix your car, TDI says your collision or your uninsured and underinsured motorist coverage should pay the difference, and you pay a deductible if you file with your company. Collision is the tool for your metal. Uninsured motorist property damage is a different coverage. Do not assume one replaces the other until you read both on the declarations.

The other driver’s company is not your collision carrier. TDI says the prompt-payment deadlines that apply to your own company do not apply to theirs, though they must act in good faith. Collision is how you stop waiting on a fault dispute. If your company later recovers from theirs, the Institute says your deductible can be reimbursed. That recovery is an effort, not a promise. On your own claim, TDI says the company acknowledges within 15 days, accepts or rejects within 15 business days after it has what it needs, may take 45 days if it explains the delay, and sends the check within five business days after it agrees to pay.

Rentals, new cars, and what collision skips

A rental is not automatic. TDI says the at-fault driver’s company pays for a reasonable repair-time rental. Your company pays if you bought rental reimbursement, which is a separate daily limit, or in the uninsured and stolen-car cases the guide lists. Collision alone is not the rental line. A newly acquired car is covered automatically for about 20 days. A replacement keeps the coverage of the car it replaces. An additional car gets the broadest coverage already on the policy. Tell the company before that window closes.

Collision is not mechanical breakdown, and it is not wear. The Institute says so. It is not a hail claim. It is not the liability that pays the pole and the other driver’s door. Those are property damage liability, covered on our property damage guide. If the car is financed, keep collision and comprehensive in force. If it is paid off, decide with the value and the deductible in front of you, not with the phrase “full coverage.”

Texas Insurance Resources can compare collision deductibles with licensed agents. We do not total the car and we do not pick the shop. Bring the declarations page and what you still owe.

Sources

Deductible math, actual cash value, lender requirements, total losses, rentals, the roughly 20-day new-car window, shop choice, like-kind parts, appraisal, and claim deadlines come from the Texas Department of Insurance auto insurance guide, the only TDI page cited here. What collision pays for, the deer-versus-crash split, at-fault use, deductibles of $500 or $1,000, and gap as market value versus the loan come from Insurance Information Institute articles. The note that state law does not require collision, and that lenders may, also appears in the NAIC auto insurance topic.

• Texas Department of Insurance, auto insurance guide
• Insurance Information Institute, what a basic auto policy covers
• Insurance Information Institute, auto insurance basics
• Insurance Information Institute, how much auto coverage do I need
• NAIC, auto insurance