Collision Insurance

What is collision coverage?

In contrast to liability car insurance or accident benefits coverage, collision coverage is not mandatory in Canada. Although it is designed to protect policyholders against damages from collisions, it doesn’t work the same as other types of mandatory coverage.

Collision coverage is a type of property damage coverage. It does not cover medical expenses or legal fees incurred from an accident. However, it will cover repair and replacement costs if your car is damaged in a collision.

Collision insurance matters because basic coverage in Ontario only covers property damage when the policyholder is not at fault for an accident. When a policyholder is held liable for a collision, basic liability coverage won’t protect them. In other words, the policyholder has to pay to repair or replace their vehicle out of pocket. On the other hand, collision coverage allows you to file a collision claim with your insurance company and gives you a payout to cover these costs.

What does collision insurance cover?

The majority of collision insurance policies cover vehicle repairs if your vehicle is damaged in a collision. Collision insurance offers broader coverage than other types of property damage coverage, such as direct compensation coverage. It doesn’t matter whether you were at fault for an accident or not when you have collision insurance. In contrast, direct compensation property damage coverage only covers you if you are not held liable for the accident. Collision coverage helps pay for the following:

• Property damage from at-fault accidents
• Property damage from single-vehicle collisions
• Property damage from multi-vehicle collisions
• Property damage after colliding with an animal
• Property damage after colliding with a grounded object (e.g. a tree, median, lamppost, etc.)

At-fault accidents happen. This is true for even the best drivers. These Alberta wildlife collision statistics show the risks of single-vehicle collisions for Albertan motorists.

Knowing the common causes of collisions can help you avoid an accident in your home province, but it doesn’t guarantee it—that’s why collision insurance matters. If something unexpected happens and you get into an at-fault accident, you’ll need an auto insurance policy with the right coverage.

How much does collision insurance cost?

The cost of adding collision insurance coverage to your auto insurance policy often varies. Regardless, you should expect your insurance rates to increase if you didn’t have collision coverage on your car insurance policy before. However, this isn’t any different from adding any other type of additional coverage to your car insurance policy.

The amount your rates will increase depends on several factors. These include the collision insurance deductible amount you choose, the collision insurance limit you choose, and the make and model of the car you drive. There are a few additional factors that can influence your car insurance rates in Canada, including:

• Where you live
• Age
• Gender
• Vehicle type
• How you use your vehicle
• Driving record
• Driving experience
• Past claims
• Prior insurance coverage
• Number of kilometres you drive
• Type of coverage on your policy
• Your deductible(s)
• Your credit score

It’s important to note that collision coverage costs more for luxury high-end vehicles. Your auto insurance rates might all fluctuate if you choose a low deductible amount or a high coverage limit.

For a more accurate idea of how much collision coverage will cost, speak with a car insurance broker from BrokerLink today. We provide complimentary car insurance quotes, which you can use to budget for collision insurance.

Factors to consider when adding collision coverage to your car insurance plan

There are a few aspects to consider when deciding whether or not to add collision insurance coverage to your auto insurance policy. You should think about the following factors before adding this optional coverage to your car insurance plan:

Your driving record

If you have a history of at-fault accidents, having collision insurance as part of your car insurance coverage is probably a good idea. If you don’t, you risk having to pay out of pocket for property damage you cause during an accident. Remember, accidents affect car insurance rates, which means you will have to pay more for collision coverage if you have a history of at-fault accidents. Even single-vehicle collisions can affect insurance, which makes a difference, considering how much car insurance is per month in Ontario.

Value of your vehicle

If you own an expensive vehicle, you shouldn’t skip out on collision coverage. In fact, your insurance company will likely recommend it. That’s because high-value vehicles cost more to repair or replace if they get into an accident.

Your deductible amount

When you add collision coverage to your car insurance policy, you have to choose a deductible. Your deductible is the amount you have to pay before your insurance company provides coverage. When you choose a higher deductible, you will pay less for car insurance, but pay more if you get into an accident.

Your coverage limit

When you purchase collision coverage, you will select a coverage limit. Your coverage limit will directly impact your car insurance premium. A higher limit will lead to a higher premium, but you shouldn’t set your limit too low. Your coverage limit should accurately reflect the value of your vehicle.

How much should my collision coverage deductible be?

Deductible amounts make a difference in car insurance, so you should be cautious when choosing your deductible.

Generally, you should expect to pay more for your car insurance if you have a lower deductible and vice versa. In other words, a high deductible will reduce your auto insurance rates. If you can afford a higher deductible, you should get one because it reduces the amount you pay for collision coverage. Collision coverage deductibles range from $500 to $2,000, but will vary depending on your insurance company. There are a few factors to consider when choosing your deductible. Think about the following:

• The value of your vehicle
• The age of your vehicle
• How expensive your vehicle is to repair or replace
• How much money you can afford to pay out of pocket if necessary
• Your driving record

If you need help choosing a collision coverage deductible, contact BrokerLink today. One of our licensed car insurance brokers would be more than happy to offer a professional opinion on the right deductible amount for your vehicle, driving habits, and budget.

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Is collision coverage mandatory in Canada?

No, collision coverage is not a government-mandated type of car insurance in any Canadian province or territory. Unlike uninsured automobile insurance or third-party liability coverage in Ontario, it’s not illegal to drive without collision insurance.

However, if you lease or finance your car, your leasing or financing company may require you to have collision coverage. If this is the case, you may be contractually obligated to add collision coverage to your policy until the lease is up.

Collision coverage vs. comprehensive coverage

Let’s clarify — collision coverage is not the same as comprehensive car coverage. Similarly to collision coverage or accident forgiveness coverage, comprehensive coverage is optional.

Despite this, comprehensive coverage is different from its counterpart. It doesn’t cover damage to your vehicle if you get into an accident with another vehicle or object, such as a street sign. On the contrary, it covers damage to your vehicle that happens outside of collisions. Comprehensive coverage instead covers the following perils:

• Theft
• Vandalism
• Falling and flying objects
• Glass damage
• Fire
• Explosions and riots
• Weather-related events (e.g. floods or high winds)

The difference between collision and comprehensive coverage is damages will be covered if caused by an insured peril. When this happens, you can file a comprehensive claim with your insurance company. From there, you will receive a payout to cover repairing or replacing your car.

What is the difference between liability insurance and collision coverage?

Liability coverage and collision coverage both protect against the costs associated with at-fault accidents. Despite this, they are different.

Third-party liability insurance is mandatory in every Canadian province and territory. In other words, it’s a legal requirement. Several provinces stipulate the amount of liability coverage you must carry (e.g. a minimum of $200,000 in Alberta and Ontario).

Additionally, liability coverage pays for medical expenses, repair bills, and legal fees associated with at-fault accidents. It also pays for the costs of the accident incurred by the victims. In other words, it won’t cover the expenses of the at-fault party.

In contrast, collision coverage is not government-mandated and doesn’t have a minimum coverage limit. It also only covers property damage, not medical expenses or legal fees. Collision insurance covers the accident costs incurred by the policyholder, whether they were at fault or not. It does not cover any expenses by the person who isn’t the policyholder.

These two types of coverage complement each other. Both are recommended and help prevent financial loss that can occur after colliding with another vehicle or object. Collision insurance pays for what third-party liability coverage doesn’t.

When should I remove collision coverage from my policy?

Collision insurance coverage is important, but it doesn’t make sense to keep it for every policyholder. It’s more helpful for those with high-value vehicles. After a few years, the cost of collision coverage could be 10% or more than your car’s worth, which is when it’s no longer required.

If this is the case, a BrokerLink insurance advisor can help remove any unwanted coverages. From there, your car insurance premium will likely go down.

In some cases, collision coverage can come in handy, though. When you lease or finance your car, have a long history of collisions, or prefer the added peace of mind, it might be worth it. You never know when you could get into a hit-and-run accident with an unidentified driver. That’s why knowing how to report a car accident is so important.

Mandatory car insurance coverage in Ontario

Now that you know how to protect your new car with collision and comprehensive coverage, let’s discuss the mandatory types of auto insurance coverage in Ontario. Adding collision insurance coverage to your car or motorcycle insurance plan is optional. However, the following types of mandatory insurance coverage are legally required to drive in Ontario:

Third-party liability coverage

Liability car insurance helps pay for the cost of at-fault collisions that result in property damage or bodily injury. If the policyholder is responsible for the accident, a liability coverage claim can help pay repair bills or medical expenses incurred by the victim. It also helps pay for legal fees, such as defence and settlement costs.

Accident benefits coverage

Accident benefits coverage helps pay for medical or rehabilitative care if someone is injured in a car accident. This type of coverage reimburses the policyholder for medical treatment, such as physical therapy or prescription medication. It also pays for funeral fees and lost wages if necessary.

Direct compensation - property damage coverage

Direct compensation coverage is a type of property damage coverage that helps the policyholder repair their car if it gets damaged in an accident. However, the policyholder cannot be at fault for the accident.

Uninsured automobile coverage

Uninsured automobile coverage, or uninsured motorist coverage can cover you if you get into an accident with an uninsured or underinsured driver. It can also help you if you get into a hit-and-run accident with an unidentified driver.

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Other types of optional car insurance coverage in Ontario

As discussed, collision insurance is one of the many optional types of car insurance coverage available. However, it’s not the only one — let’s get into them below:

Comprehensive coverage

Comprehensive car insurance coverage covers risks outside of car accidents. Your car could get stolen, vandalized, or damaged by a tree branch or fire. Weather-related damage and other scenarios are also covered under comprehensive coverage. You can add it to your policy and sometimes receive the maximum payout, depending on the severity of the damage.

Accident forgiveness coverage

Accident forgiveness coverage is common among many drivers, especially those with little experience on the road. This optional coverage will protect your driving record by preventing your insurance company from raising your insurance premiums after your first at-fault accident. Note that coverage and eligibility vary by province.

Waiver of depreciation

A waiver of depreciation will help pay to replace your car if it’s written after an accident. If you don’t have a waiver of depreciation, you might still receive an insurance payout. However, it will be much less if you don’t have this added coverage. Even an experienced driver can get into a car accident, which can help. Note that you will receive the amount your car is worth based on depreciated value.

Loss of use coverage

Loss of use coverage offers financial security if you are without your car after an accident. For example, if your car is stuck in the shop for repairs after an incident, you will need to find other ways to get around. Rental cars, ubers and taxis can get expensive. If you have this type of optional coverage, your insurance company will reimburse you for such expenses as long as you don’t exceed your coverage limit.

Tips to find cheap car insurance in Canada

Adding collision coverage to your car insurance policy will increase your rates. However, there are ways to counteract this. BrokerLink has compiled a list of tips to help your financial situation and save money on your insurance policy below:

Pay for your policy annually

You can avoid administrative or transaction fees by paying for your insurance policy annually instead of monthly. If you have the option of paying annually, choose it over monthly. If you opt for the latter, ask your insurance company if there are extra fees that come with paying monthly.

Increase your deductibles

Raising your deductibles makes a difference whether it’s for third-party liability or collision insurance coverage. A higher deductible means you will take more financial responsibility than your insurance company if you make a claim. However, this will reduce your rates in the long run.

Insure multiple cars together

If you live in a household with more than one vehicle, insure them together. By bundling your vehicles, you may be eligible for auto insurance discounts.

Bundle and save

Bundling multiple insurance products can lead to major savings. You can bundle home and auto insurance or auto and recreational vehicle insurance. Contact BrokerLink to learn more about how you can save money on your car insurance.

Ask about other car insurance discounts

Ask your insurance broker about other car insurance discounts. You might qualify for an employment or education-based discount. It doesn’t hurt to ask.

Put winter tires on your car

Installing winter tires on your car can reduce your auto insurance rates. Many insurance companies offer discounts to drivers who add snow tires to their cars during the winter. Sometimes, you have to meet certain conditions like installing the tires by a certain date and having all four tires be the same model.

Review your car insurance coverage annually

We mentioned removing collision coverage when you’re ready. However, you might not know that you can do the same with other types of optional coverage. You can also reduce coverage limits and raise deductibles to save money on car insurance.

Attend driving school

Going to driving school can help you save money on your car insurance plan. Whether you’re a new or experienced driver, you can benefit from a defensive driving course. Show your insurance company proof, and you could get a discount on your insurance.

Become a safer driver

Follow our safe driving tips to reduce your rates. If you drive safer, you will have a clean driving record and lower premiums. Maintaining a clean driving record can make you eligible for a safe driver discount.

Go hybrid or electric

Consider purchasing a hybrid or electric vehicle. You won’t just save on gas. Many insurance companies offer discounts to those who drive eco-friendly cars.

Contact BrokerLink to learn more about collision insurance

Whether you want to learn more about how collision coverage works or require an expert opinion on whether collision coverage is worth adding to your car insurance policy, BrokerLink can help.

Our team of licensed insurance brokers can review your policy and let you know what types of optional coverage suit your needs. We can also recommend coverage limits and deductibles. As a full-service auto insurance brokerage, we can shop around for you and find the most affordable collision coverage for your needs.

Contact BrokerLink to request a free car insurance quote. Call, email, or visit one of our locations across Canada. You can get a free quote in as little as five minutes!

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Collision Insurance FAQs

Can anyone add collision coverage to their car insurance policy?

Yes, most insurance companies offer collision coverage to all customers. However, the cost of coverage will vary. Request a free quote before adding it to your policy.

What doesn’t collision insurance cover?

Collision insurance only covers collisions. Theft, vandalism or damage caused by weather-related incidents fall under comprehensive insurance. Collision coverage only covers property damage claims — if you are injured in a car accident, you will not be compensated. It also won’t help you if someone files a lawsuit against you.

If I get into an at-fault accident, will my auto insurance premium go up?

Yes, at-fault accidents always increase premiums unless you have accident forgiveness coverage. Collision coverage helps pay for repairs following an at-fault collision. Expect to pay more for car insurance once your policy is renewed.

What types of insurance can a car insurance broker help me find?

Car insurance brokers can help customers find various types of coverage. This includes mandatory coverage, such as third-party liability coverage and uninsured automobile coverage, as well as optional coverage, such as comprehensive insurance coverage or collision insurance coverage. A broker can also help you shop around to find the best rate for the coverage you’re looking for.

Can I get a free car insurance quote?

Yes, contact an insurance broker or company to get a free quote today. Most insurance companies offer free quotes to customers with no strings attached. Confirm this is true before requesting a quote.

If you have any questions, contact one of our local branches.