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What is collision insurance?

Collision insurance is a form of coverage that can be added to a standard car insurance policy. It provides financial compensation for any damage to your vehicle caused by a collision.

As with other forms of auto insurance, collision protection has a deductible, which determines the amount you’ll pay out of pocket in the event of a claim.

Collision insurance is an add-on, rather than a policy unto itself. In other words, you cannot have a car insurance policy that covers damage from collisions only. When finalizing a policy with an insurance provider, you’ll have the opportunity to select or forego collision insurance as part of your coverage.

Frequently asked questions about collision car insurance

What does collision insurance protect against?

Collision insurance protects against damage that results from your vehicle colliding with an object. This may be another vehicle, a guard-rail or a tree, among other things.

If you have collision insurance, your insurance provider will pay to repair or replace your vehicle, up to its actual cash value, regardless of who is at fault.

What collision insurance doesn’t cover can be summarized as everything outside of colliding with another object. If, for example, your car is vandalized while parked, or if your windshield is cracked by hail while you’re driving, collision insurance will not cover the resulting costs.

Is collision insurance mandatory in Canada?

Collision insurance is defined as an optional coverage type in Canada, with the exception of Manitoba, where it is mandatory. This means the majority of Canadians have the option to add or forego collision coverage. If you are leasing your vehicle, however, your lender may require that you have collision coverage.

Can I get a collision insurance quote?

Because collision insurance is an optional type of coverage, there is no such thing as a quote that shows the cost of collision insurance by itself. All quotes you receive for a policy that includes collision insurance will reflect the total sum of standard coverage + collision coverage + any additional coverage you opt into. What is defined as ‘standard coverage’ varies by province but will always include third-party liability.

Will having collision insurance increase my premiums?

Yes. Having collision insurance means your insurance company is taking on more risk, which means they’ll charge more. Precisely how much collision insurance will increase your premiums depends on the make and model of your vehicle, the amount of coverage you add and the deductible you have. And, just as the cost of a standard car insurance policy will vary from provider to provider, different companies will charge different amounts for collision insurance.

Does my auto insurance provider offer collision coverage?

Most likely. Collision coverage is offered by all major auto insurance providers. You can contact your current car insurance provider to have collision coverage added to your existing policy or select it as an add-on when given a new car insurance quote.

Who should get collision insurance?

Collision insurance can give drivers added peace of mind, knowing they won’t be financially responsible to repair or replace their vehicle in the event of a collision. But while the added protection is nice, it’s not free. Each individual driver should consider whether collision insurance is worth the cost in their own specific scenario.

Generally speaking, collision insurance is most practical for those with vehicles on the expensive side - vehicles that cost a lot to fix or replace out of pocket. If, on the other hand, you have a car that’s worth only a couple thousand dollars, collision insurance is likely not worth the cost, as your premiums and deductibles will quickly outpace the amount of compensation you’ll receive in the event of a claim.

Additionally, getting collision insurance is usually a prerequisite if you plan to lease a vehicle.

What’s the difference between collision and comprehensive insurance?

Collision insurance protects against damage caused by another vehicle or an object – e.g. you’re involved in a collision or drive into a streetlight. Comprehensive insurance protects against non-collision damage, like dents caused by hail or vandalism.

When selecting the coverage for your vehicle, collision vs. comprehensive insurance isn’t an either/or decision; drivers can choose to add one, both or neither type of coverage to a standard policy.

Is collision insurance expensive?

Depending on your vehicle, the replacement or repair cost can be great, which means higher risk for your insurance company. This means collision insurance may sometimes cause premiums to increase in a significant way. However, there are several factors that determine the added cost of collision insurance, and it will vary from provider to provider, and from driver to driver.

What determines the cost of collision insurance?

Many of the same factors that determine the cost of standard auto insurance contribute to determining the cost of collision insurance. Chief among these factors is the replacement value of your vehicle, as the this dictates how much your insurance company will need to pay should you make a claim.

Does collision coverage have a deductible?

Yes. Collision insurance coverage requires the policyholder to have a deductible that’s specific to collision claims. A typical deductible for collision insurance is $500 or $1,000, but the options may vary by provider.

Doesn’t my regular insurance cover car accidents?

When people think about car insurance, most expect their policy will cover damage from a car accident. But this isn’t always the case. If you’re in an accident that is someone else’s fault, their third-party liability insurance, which is a mandatory type of coverage, will pay for the repairs or replacement of your vehicle. However, if you’re at fault for a collision, or are involved in a single-car collision – e.g. you hit a tree – standard auto insurance may not cover the costs.

How to get the cheapest collision insurance

As with any type of car insurance, the surest way to find the lowest rate is by comparing offers from as many companies as possible. While you might assume the company that offers the cheapest policy for third-party liability or comprehensive car insurance will also offer the best rate for collision insurance, this isn’t always the case. Each insurance company uses a proprietary formula to calculate the cost of a policy; just because one company’s formula may churn out the lowest premium for one type of coverage doesn’t mean it will do so for all types.

The only way to find the cheapest car insurance policy that includes collision coverage is by comparing quotes from different insurers.

What are the other types of car insurance I can buy?

Collision insurance provides financial protection from damage caused by a crash. Other types and sources of damage and injury are covered by other forms of auto insurance. Additional auto insurance coverages include:

  • Third-party liability: Covers the costs of legal fees, medical bills and vehicle damages incurred by another person if you are found to be at fault for an accident.
  • Comprehensive insurance: Covers damage to your vehicle caused by a non-collision event – e.g. your car is vandalized while parked.
  • Emergency road service: Covers the costs if your vehicle breaks down – e.g. gas delivery, a new battery, a replacement tire, etc.

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