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Written by Shivani Kaul

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.

This can include damage from: an at-fault accident, a single vehicle incident, or, if another driver hits you and leaves the accident scene.

Collision coverage will also pay to replace a vehicle, based on its value at the time of the accident, if the insurance provider determines that it cannot be repaired.

Collision insurance is not mandatory in Canada. It’s considered 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.

What car insurance is deemed essential depends on your province. For example, Ontario drivers must have at least four types of coverage. They are:

  • Accident benefits: which will cover your medical bills if you’re injured and income replacement if you can’t work.
  • Direct compensation-property damage (DCPD): Covers damage to your car and its contents, if you are not at fault in the collision.
  • Third-party liability: Protects you if your car kills or injures someone else. It also covers property damage. All Ontario drivers must have at least $200,000 in third-party liability coverage, but many drivers choose to buy much more than that.
  • Uninsured automobile coverage: Protects you if you’re injured or killed by a hit-and-run driver or an uninsured motorist.

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 for. What is defined as ‘standard coverage’ varies by province but will always include third-party liability.

As with other forms of auto insurance, collision protection has a deductible, which determines the amount you’ll pay out-of-pocket if you need to make a claim.

There are some liabilities that collision insurance doesn’t cover you for. For example, if you kill or injure someone with your car, third-party liability coverage, which is mandatory, will protect you rather than collision.

Collision coverage does not cover the cost of a rental while your car is in the shop. For that, you will need Loss of Use coverage.

How collision insurance works in different situations

  • You're at fault in an accident and have collision insurance

If you’re found to be at fault in an accident and have collision insurance in addition to standard coverage, your insurance company will pay to replace your vehicle if it cannot be repaired, based on the vehicle’s value at the time of the accident. For example, if the car you bought 4 years ago was $44,000, but at present its value is $29,000, in case of a total write-off you will receive $29,000 from your insurance provider to buy a new car.

  • You're at fault in an accident and have no collision insurance

If you have not opted for collision coverage and you get into an accident, you will have to pay for all expenses related to your car on your own. Your insurance provider will not pay you any money to replace your car in case it is a total write-off. Your third-party liability protects the other party and their car in case of an accident. Your accident benefits will pay for your recovery from any injury caused during the accident.

  • You're not at fault and have collision insurance

Your insurance adjuster might find you to be at 0% fault, in that case you will be completely protected under the collision coverage. The insurance provider will pay you the current value of your car as per market standards in case of total damage to your vehicle.

  • You're not at fault and have no collision insurance

There could be two scenarios in this situation. If you are not at fault and have no collision coverage, you could still be covered by the other driver’s third-party liability. If you live in a province where Direct Compensation Property Damage (DCPD) exists such as Ontario, Nova Scotia, PEI, New Brunswick, and Quebec, you could still be protected if you do not have collisions coverage. But, if you are in a hit-and-run car accident where the at-fault driver causes damage to your vehicle and flees the scene before they could be identified, you would not be covered in case of total loss.

Do you need collision insurance coverage?

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.

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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 car insurance 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.

Frequently asked questions about collision car insurance

Find out answer to all your collision coverage questions here.

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.

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.

Some factors with the most significant impact on premium cost include the following:

  • The city and neighbourhood you live in. If there’s a high volume of car thefts, you can expect to pay more for coverage.
  • Your car’s make and model.
  • Your driving record.
  • Your claims history. If you’ve made a car insurance claim in the past decade, expect to pay more for coverage.
  • The amount you drive and where. If you commute daily, expect to pay more.
  • Your age, gender and marital status.
  • And the number of drivers on the policy.

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.

What is accident forgiveness?

Drivers can add an endorsement to their policy that prevents the premium from increasing after a first at-fault accident. While you’ll pay more for this type of coverage, it protects you from premium increase in case you are at fault in an accident, irrespective of to what degree you caused injury or harm.

When should I drop collision insurance?

If you’re content to cover the cost of repairs to a vehicle following a collision, you don’t need collision insurance. For example, if you have a very old car that wouldn’t necessarily be expensive to repair following an accident, you can likely do without optional coverage such as collision coverage. There are some liabilities that collision insurance doesn’t cover you for. For example, if you kill or injure someone with your car, third-party liability coverage, which is mandatory, will protect you rather than collision. In other words, it’s a different aspect of the car insurance policy that is offering liability protection.ve to repair following an accident, you can likely do without optional coverage such as collision coverage.

There are some liabilities that collision insurance doesn’t cover you for. For example, if you kill or injure someone with your car, third-party liability coverage, which is mandatory, will protect you rather than collision. In other words, it’s a different aspect of the car insurance policy that is offering liability protection.

Is it better to have a $500 deductible or $1,000 for collision coverage?

It’s a personal choice. The deductible is what you will pay out-of-pocket in the event of a claim. Most drivers choose a deductibe of either $500 or $1,000. If the cost of fixing the damage to your car is less than the deductible, you pay the full repair bill. While you can lower your premiums if you choose a higher deductible, doing so has the benefit that you’ll pay less if you must make a claim.

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.

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