In the world of car insurance, there are many types of coverage to be aware of, and that includes collision coverage and comprehensive coverage. Although they are not mandatory anywhere in Canada, that doesn't make them any less important. In fact, collision and comprehensive coverage are two of the most popular types of optional coverage that policyholders choose to add to their policies. Despite their popularity, many people get the two confused, so we are here to set the record straight. Continue reading for a breakdown of collision and comprehensive coverage and how they differ.
Collision coverage
First up is collision car insurance. Collision coverage is a type of optional auto insurance coverage that is designed to offer financial security to policyholders in the event of accidents BrokerLink has put together a list of common car accidents if you wish to familiarize yourself with the most common motor vehicle accidents. Specifically, collision coverage is a form of property damage coverage, meaning it can help pay to repair or replace your vehicle if it gets damaged in a collision.
What many policyholders fail to realize is that mandatory car insurance coverage in Canada does not cover property damage to your car when you are at fault. This means that if you are deemed at fault for an accident, you will be on the hook for paying for the cost of the necessary repairs unless you have collision coverage.
What does collision insurance cover?
Collision auto coverage can pay for vehicle damage repairs that are caused by a wide range of risks. For example, suppose you are involved in a single-vehicle collision, such as colliding with an animal like a deer or moose or a grounded object like a median, rock, tree, or building. In that case, you can file a collision coverage claim. Of course, collision coverage will also cover you if a collision with another motor vehicle causes damage to your vehicle. Find out the most common causes of collisions here.
Comprehensive car insurance
Comprehensive car coverage is the second type of optional coverage we are discussing today. Where collision coverage deals specifically with damage from accidents, comprehensive coverage pertains to damage caused by incidents other than collisions. For example, you would file a comprehensive coverage claim if your car is stolen or vandalized. The same goes for if your car was damaged by a flood, hail storm, or due to a tree branch falling on it. There are a wide number of non-driving related risks that comprehensive insurance covers, which is why it’s often referred to as parked car insurance.
What does comprehensive insurance cover?
Comprehensive insurance covers non-collision-related losses. The specific losses it protects against vary depending on your insurance provider and policy. However, they generally include the following:
- Explosions, riots, and other civil disturbances
- Falling and flying objects
- Fire
- Glass damage
- Floods
- Hailstorms
- Hurricanes
- Theft
- Vandalism
- Windstorms
Please note that in some cases, collisions with animals are covered by comprehensive insurance rather than collision insurance. Be sure to review the terms and conditions of your policy to find out what type of coverage to claim in the event of an accident involving an animal.
Further, comprehensive coverage may also pay for glass replacements, such as windshield replacements, if the glass in your car is damaged.
The cost of adding collision coverage to your auto insurance policy
The cost of adding collision coverage to your auto insurance policy varies based on a number of factors. For example, your vehicle type will significantly impact how much collision coverage costs. Vehicles that are more expensive typically cost more to repair or replace, and thus, your coverage is likely to cost more if you drive a luxury car.
The cost of adding comprehensive coverage to your auto insurance policy
As with collision coverage costs, comprehensive coverage costs differ between policyholders. This is because there are many factors that influence how likely you are to file a comprehensive coverage claim, all of which an insurance company will consider when determining your premium. Some of the factors that will be considered include the make and model of vehicle you drive (and how much it will cost to repair your car if need be), the rate of theft for the type of vehicle you drive, and how prone to weather-related events, like wildfires and hurricanes, your city of residence is.
Choosing a collision coverage deductible
When you add collision coverage to your car insurance plan, you will need to select a deductible. The deductible is the amount you must pay toward an insured loss. Deductible options vary widely and can fall anywhere between $500 and $2,000 for collision coverage. The higher the deductible you choose, the lower your premium will be. However, if your car was damaged in an at-fault accident and you needed to file a collision coverage claim, you would be responsible for paying your total deductible before receiving a payout from your insurer.
Is collision coverage mandatory?
No, collision coverage is not mandatory in Canada. No provincial or territorial government requires drivers to carry collision coverage. If you lease or finance your car, your leasing or financing company might require you to add it to your policy. Find out more about getting a car loan here.
Choosing a comprehensive coverage deductible
Comprehensive coverage deductibles are usually available in lower amounts than collision coverage deductibles. However, just as with collision coverage deductibles, you get to pick the deductible you want. Depending on your insurance provider, comprehensive deductibles may start as low as $100.
Is comprehensive coverage mandatory?
No, comprehensive coverage is not a legal requirement in Canada. This means that it is entirely up to you to decide whether you wish to add this optional coverage to your policy. The only exception to this is if you lease or finance your car. If your vehicle is leased, your lender might require you to have valid comprehensive coverage throughout your lease or financing agreement. Be sure to review the terms and conditions of your lease agreement carefully.
Collision coverage vs. comprehensive coverage: the differences explained
Now that you know more about collision and comprehensive coverage, let’s outline the differences to avoid confusion:
What is covered
Collision coverage covers property damage to your car following a collision, whether that collision is your fault or not, and whether it occurred with an object, animal, or another motor vehicle. On the other hand, comprehensive coverage can pay for losses or damage related to events other than collisions, such as theft, vandalism, or damage caused by fire, natural disasters, a falling object, or an explosion or riot. Please note that your policy may cover rental insurance while you are on vacation. Ask an insurance broker to review your policy if you want to confirm whether or not it includes rental car insurance.
Legal requirements
Drivers in Canada are not legally required to add either collision or comprehensive coverage to their policy. Unlike liability car insurance, accident benefits coverage, uninsured motorist coverage, and direct compensation coverage, there is no government mandate in place for collision and comprehensive coverage. You might be contractually obligated to purchase these coverage types if you lease or finance your car.
Cost
Costs vary considerably for both types of coverage. However, on average, it costs more to add collision coverage to your policy than it does to add comprehensive coverage. In addition, filing claims under either type of coverage can increase insurance premiums, especially if you file multiple claims in a short period.
Deductibles
Lastly, insurance deductibles for collision and comprehensive coverage also vary, though in both cases, the policyholder gets to decide what amount they want to select. Comprehensive coverage deductibles are usually smaller and may start as low as $100, whereas collision coverage deductibles are often higher, going up to $2,000 or more.
Which is better? Collision or comprehensive coverage
There is no clear answer here, as the answer will differ depending on who you are talking to. Both offer protection against different risks, so it’s hard to compare them. If you are debating which one to purchase and can only afford one, we suggest considering factors like cost and the primary risks you face. If you live in a neighbourhood with a high crime rate or an area prone to natural disasters, then comprehensive coverage might make the most sense.
Alternatively, if you are a new driver or have a poor driving record, then your odds of getting into an at-fault accident might be higher, in which case, collision coverage might be the best type of coverage for you. If you are working on improving your driving record, check out these safe driving tips.
Remember that collision coverage often costs more than comprehensive coverage, so if budget is a top concern, this is another factor to consider. For an accurate idea of how much it will cost you to add collision and/or comprehensive coverage to your policy, contact a BrokerLink insurance advisor today. We can offer you a free insurance quote to give you an idea of how much each coverage will cost.
Should I buy both collision coverage and comprehensive coverage?
Since collision and comprehensive insurance cover different risks, it might be wise for policyholders to consider purchasing both coverages. This way, they will have the broadest possible coverage against many risks. Without either type of coverage, you would have to pay for the cost of at-fault accident damages to your car and non-collision-related damages to your car out-of-pocket. These expenses can quickly add up.
Collisions and comprehensive coverage may only make sense if you own a new car. If your vehicle is older or not worth much, adding these types of optional coverage may not be worth it.
Contact BrokerLink for more information on collision and comprehensive coverage
As two of the most important types of auto insurance coverage out there, it’s essential to understand how collision and comprehensive coverage can protect you. A BrokerLink insurance advisor would be happy to walk you through optional coverage, including both collision and comprehensive coverage and accident forgiveness coverage, and explain how they differ and how much they cost to add to your policy.
For any car insurance related questions, don’t hesitate to contact BrokerLink. We can help you find the perfect policy for your needs and budget, offer you a free quote, or even help you renew your policy. We are here to help you meet your auto insurance needs - whatever they may be.
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