State Farm Insurance License Practice Exam

What type of coverage does 'collision' refer to?

1. Damage that occurs from natural disasters.

2. Loss resulting from the insured auto striking another object or vehicle.

3. Acts of vandalism against the insured vehicle.

4. Theft of the insured automobile.

The correct answer is: Loss resulting from the insured auto striking another object or vehicle.

Collision coverage specifically refers to the insurance that pays for damages to the insured vehicle resulting from a collision with another vehicle or object. This coverage applies regardless of who is at fault in the accident, ensuring that the policyholder can repair or replace their vehicle after such an incident. In contrast, damage from natural disasters is covered under different policy provisions, such as comprehensive coverage. Acts of vandalism and theft are also covered by comprehensive insurance, not collision coverage. Therefore, the distinction is significant in understanding the nature of collision coverage and its purpose in auto insurance policies.