Collision insurance - what is it?
Oct 9, 2019 2 minute read
What is collision coverage?
Collision insurance is an optional, but important, coverage that one can add to their car insurance policy for extra protection. This coverage is in place to protect you and your vehicle if you’re involved in an accident with another vehicle or object. This policy will cover any repairs or replacements that are needed as a result of said accident regardless of fault.
This includes accidents caused by other drivers, collisions where you are at fault, or a hit and run where the identity of who caused the accident is unknown (as long as it is reported to police). This policy also extends to single-car accidents that involve objects, such as a road sign, pole, fence or even a pothole.
What is not covered by collision coverage?
Collision insurance does not cover any damage to your vehicle that is not related to driving, such as theft or weather-damage; this is covered under a separate policy called Comprehensive Insurance. This policy also does not cover any medical bills that come as a result of an accident. Lastly, collision coverage does not cover any damage to another driver’s car, as each policy only covers the specific driver whose actual name is on the policy.
What is the difference between Collison and Comprehensive Coverage?
To put it simply, both types of policies are very similar in regards to their overall structure, but cover completely different things. Collison insurance covers damages that occur as a result involved collision with another vehicle or object, while comprehensive insurance covers your car against all of the following:
- Weather related damages, such as floods, strong winds and hail
- Damages as a result of falling branches or other objects
- Theft and vandalism of your vehicle
How much does collision coverage cost?
Unfortunately, it is hard to pinpoint one specific cost for collision coverage, as many different factors are used to determine the price. These factors can include the model of your vehicle, the value of your vehicle, and your driving and collision history. The cost of this policy also depends on the deductible that you choose. Just like most insurance policies, the higher the deductible = the lower the cost of your premium.
However, there are other ways to lower your premium without having a high deductible, such as:
- Bundling your auto insurance with your home insurance
- Improving your driving record
- Amending coverages
Is collision coverage required?
While this type of coverage sounds like a standard form of insurance to include in your policy, it is actually not mandatory for you to have in Canada. The only mandatory coverages under a car insurance policy are liability coverage, accident benefits, direct compensation and uninsured automobile coverage.
However, there is one exception when this coverage does become mandatory, and that is if you are leasing or financing a vehicle.
Why should I get collision coverage?
Transport Canada has identified that there are over 150,000 car accidents occurring in Canada each year. Of the 150,000, accidents reported often occur between two vehicles, single cars, or an object such as a pole or tree. None of these types of accidents are covered under your standard car insurance policy; they are only covered if you have collision coverage. If you do not have this additional coverage on your policy, any damages to your vehicle or replacements will be paid for out-of-pocket.
When deciding whether you should invest in this additional coverage, it is important to consider how much it would cost to repair or replace your vehicle if an accident like the ones mentioned above were to occur. This coverage is especially recommended to anyone with a newly-purchased vehicle, . Cars that are less than 10 years old, or any vehicle of high value.
This policy is in place to provide you with the peace of mind knowing that you are covered financially if and accident were to happen.
Have more questions about collision insurance or other coverage options? Get in touch with one of our licensed insurance professionals today.