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What is collision car insurance?
Collision car insurance is a type of auto insurance coverage that protects your vehicle if it collides with another vehicle, object or property, regardless of whether you’re the at-fault driver or not. If the vehicle ends up damaged or totaled, your insurance provider will pay for its repairs or replacement.
If you forego this coverage, you may still be covered for collision damage in some capacity – depending on where in Canada you live and the circumstances of your collision. Here are some of the coverages that may protect you:
Direct compensation for property damage (DCPD): Legally mandatory in some provinces, this coverage will pay for your vehicle loss or damage following a collision if you’re not the at-fault driver. If you are at fault, this won’t apply.
Uninsured motorist: If your car collides with a vehicle driven by an uninsured motorist in a hit-and-run, this will cover the loss or damage to your car. This coverage is mandatory in all provinces.
Talk to your insurance provider to find out what’s covered and isn’t covered in your province, so you don’t run into any surprises.
Is collision car insurance mandatory?
For most people, the answer will likely be ‘yes,’ though it’s not as straightforward as it is with other mandatory coverages (like third-party liability, for instance).
From a legal perspective, collision auto insurance is only mandatory in two provinces: Manitoba and Saskatchewan. Over there, it’s included in the base policy as part of the ‘all perils’ coverage. (It’s worth noting that the auto insurance system is public in those provinces, not privatized.)
Yet, even if you live outside of Saskatchewan and Manitoba, you may still require collision coverage. That’s because a dealer or lender won’t let you lease or finance a car without it (similar to how you can’t take out a mortgage without home insurance, despite home insurance being legally optional).
If you fully own the vehicle, consider the following when deciding whether collision insurance is for you or not:
Your car value: How much would it cost to replace or repair your vehicle? The more expensive it is, the higher your expenses will be if you forgo collision insurance.
Your deductible: The higher the deductible, the more you have to pay out of pocket for your vehicle in the event of a collision. Consider this: is it better to lower your deductible or purchase collision insurance instead?
Your finances: Taking into account both your car value and deductible, determine if you can afford to pay for your vehicle out of pocket should it end up in a collision. Do you have enough money saved up? If not, then you may need collision coverage. Otherwise, you may end up without a car.
What does collision insurance cover?
Damage to your car if it collides with another car, object or property (such as a guard rail) – whether you’re the at-fault driver or not.
Damage to your car if it collides with another car, object or property, and you’re only partially at fault. In this case, your third-party liability will kick in to cover some of the costs.
Damage to your car if it rolls over due to the surface of the ground or objects on the ground (such as rocks). This type of accident can only involve one car (yours).
What is not covered by collision insurance?
Damage to your car due to a natural disaster (such as fire, flood, lightning or hail). To get protection from this, you’ll need either ‘specified perils’ or ‘comprehensive’ coverage.
Damage or loss from falling objects, theft or vandalism. For this, you’ll need to purchase either ‘all perils’ or ‘comprehensive’ coverage.
The cost of a rental vehicle for the period your own vehicle is out of commission due to damage or loss. For this, you’ll need separate coverage, such as Ontario’s ‘transportation replacement’ coverage. Ask your insurer to find out what’s available in your province.
Medical expenses or income replacement following an accident. This is covered by ‘accident benefits’ coverage, which is mandatory in all provinces aside from Newfoundland and Labrador.
Protection for yourself or an eligible family member in the event of injury or death following an accident. For this, you’ll need Ontario’s ‘family protection’ coverage or the equivalent available in your province.
How do collision car insurance claims work in Canada?
Collision car insurance claims are relatively straightforward, provided you understand the process and know what you’re covered for. People tend to run into issues when they don’t understand their own policy or how claims work.
Since we’ve already explained how collision coverage works, it’s time to have a look at the claims process. Here it is, step by step:
Step 1: Reporting a claim. If you end up in a collision, inform your insurance provider as soon as possible – either by phone or online. If you’ve sustained an injury due to the collision, your insurer will ask you for details. You should also have a police file number ready, if you have one.
Step 2: Getting a claims representative. Once a claim representative is assigned to your claim, they’ll gather all the necessary information regarding your accident and review your claim details, taking into account your province’s road rules and other factors. They will also decide who is responsible for the accident.
Step 3: Receiving a damage estimate. The insurance company will have someone analyze the damage to your vehicle to determine whether it needs to be repaired or replaced as well as determine the extent of the repairs and their cost.
Step 4: Fixing the vehicle. Once everything is decided, you’ll be able to fix your vehicle at the repair shop of your choosing.
Step 5: Paying your deductible. Deductibles can be as low as $250 and as high as $5,000 (or even higher in some cases). The higher the deductible, the more you have to pay. Depending on the type of collision, you may be able to bypass the deductible altogether – if, for instance, you have a 0$ deductible or end up in a not-at-fault accident, in which the at-fault driver is known and insured (though you have to have opted out of a deductible for your DCPD coverage).
Will I have to pay more for insurance?
Not necessarily. Depends on how responsible you are for the crash. Generally, if you’re found to be at fault for the accident – even if your responsibility level is as low as 15% – assume that your premiums will go up. Different insurers will have their own threshold for how much responsibility they’re willing to accept before increasing their premiums, so there’s no definitive percentage.
It’s possible that if you have a long, claims-free history, your insurer may forego increasing your premiums altogether. However, the opposite will be true if you have a long history of collisions and filed claims. In this case, your premiums are very likely to go up.
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Frequently asked questions about collision car insurance coverage in Canada.
Is collision insurance required in Canada?
In most of Canada, collision, unlike liability or accident benefits, is not a mandatory coverage.
Manitoba and Saskatchewan are exceptions. Both provinces have fully public car insurance systems. The provincial auto insurance providers have decided to include collision coverage in a basic policy.
B.C. has a hybrid system. While basic auto insurance is offered through the province's public car insurance system, collision coverage in B.C. is optional. To get help repairing or replacing your car, you will need to buy collision insurance from your Autoplan broker.
Should I have collision insurance on an old car?
Most of the time, the answer to this question is: no. However, you need to consider your own unique circumstance. Depending on the facts of your situation, it may be a good idea to get collision insurance, even if your car is old (by that we mean cars that are older than five years).
Here are some things to consider before deciding to forgo collision insurance:
What is the resale value of your car according to the Kelley Blue Book? The Blue Book is published by an automotive research company and shows what car owners can expect to receive for their car when trading it in at a dealership.
Based on that information, would you be able to replace your car out of pocket, if it was declared a total loss?
How much would it cost to add collision insurance to your base insurance policy? How much would your car insurance policy cost without collision coverage?
Would you want collision car insurance coverage that offers actual cash value (the value of your car minus depreciation) or the full replacement value (you’ll receive the amount you originally paid for your car when you bought it)? Replacement value costs more.
If you bought collision car insurance, what would the deductible be (this the amount you’d be expected to pay before the insurance company will pay the rest)?
How important is a car to your lifestyle? Is it a must-have or can you get by on public transit for a little while?
Your insurance agent or broker will be able to help you sort through these questions and arrive at a decision about which form of collision insurance best suits your needs.
How much does collision insurance cost?
Your collision car insurance price will depend on two things: your insurance provider and personal factors, such as car, location, driving record, age, sex and experience. For instance, the more experience you have as a driver, the cheaper your premium will be. On the flipside, the more collisions you have on your driving record, the more expensive your premium will be. Depending on whether your area has a lot of crime or traffic, your premium will once again be either higher or lower.
The best way to ensure you get a cheap premium is by acquiring driving experience and driving as safely as possible.
In the short term, you can also shop around for insurance quotes, using comparison sites like LowestRates.ca.
How do I compare collision insurance rates?
There are two ways to compare collision insurance rates:
By contacting individual auto insurers in your area and asking each of them for a quote.
Using a comparison tool like LowestRates.ca to not only compare quotes from multiple insurers at once in a matter of clicks (for free), but to secure the cheapest auto insurance quote possible.
About the Author
Taras is the Content Manager for LowestRates.ca. He has produced thought leadership content for organizations like Constellation Software, Facebook and Yellow Pages as well as outlets like The Globe and Mail, Autoblog and MSN Autos.
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*Represents the average saved by shoppers who obtained a Collision car quote on LowestRates.ca and transacted via our contact centre between January and December 2021. The average savings amount represents the difference between the shoppers’ average lowest quoted premium and the average of the second and third lowest quoted premiums generated by LowestRates.ca.