Collision Car Insurance

What is collision coverage?

Unlike liability car insurance or accident benefits coverage, collision coverage is optional in Canada. Although it is also designed to protect policyholders against damages from collisions, it works a bit differently than any other type of mandatory coverage.

Collision coverage is a type of property damage coverage. This means that it won’t cover you for the cost of medical expenses or legal fees that arise from an accident, but it can cover you for the cost of repairing or replacing your car if it gets damaged in a collision.

Why collision coverage is so important because basic coverage in Ontario only covers property damage when the policyholder is not at fault for the accident. In the event that they are found liable for the collision, basic liability coverage wouldn’t protect them, which means they would have to pay for the cost of repairing or replacing their car out of pocket. However, if you have collision coverage, you can file a collision claim with your provider to receive a payout that helps you cover these costs.

What is covered by collision insurance?

Most 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, in that it can cover you whether you were at fault for the accident or not. In contrast, direct compensation coverage will only cover you if you are not found liable for the accident.

For example, collision coverage can cover the following:

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

The reality is that at-fault accidents can happen, even to safe and responsible drivers. Just look at these Alberta wildlife collision statistics, which reveal the risks of single-vehicle collisions for Alberta motorists.

While knowing the common causes of collisions can help you avoid getting into an accident in your home province, there is still no way to guarantee that you won’t be involved in a collision. That is why collision insurance is so important. If the unexpected happens and you find yourself involved in an at-fault accident, you will have the right insurance coverage to protect you financially.

How much does it cost to add collision coverage to my car insurance policy?

The cost of adding collision coverage to your policy varies from policyholder to policyholder. That said, you should expect your rates to increase if you previously did not have this type of coverage and are now choosing to add it to your plan. This is generally the case when adding any type of extra coverage to your policy.

Exactly how much your rates will increase depends on a number of factors, such as the collision insurance deductible you choose, the collision insurance limit you choose, and the make and model of the car that you drive.

A few other factors that can influence car insurance rates in Canada include:

• 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 is worth noting that the cost of collision coverage may be higher for luxury or high-end vehicles. It might also be higher if you choose a low deductible or a high coverage limit.

For an accurate idea of how much collision insurance will cost you, reach out to BrokerLink today. We can provide you with a complimentary car insurance quote so that you can have an idea of how much to budget for collision insurance.

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

There are a few main factors to consider when deciding whether or not to add collision coverage to your car insurance policy, and they are as follows:

Your driving record

If you have a history of at-fault accidents, then collision coverage might be a smart idea. Otherwise, you will have to continue paying for the cost of property damage resulting from at-fault accidents out of pocket. Keep in mind that accidents affect car insurance rates, which means that you will likely pay more for collision coverage if you have a history of at-fault collisions. Even single-vehicle collisions affect insurance.

The value of your vehicle

If you have a high-value vehicle, then adding collision coverage to your car insurance plan might be especially important. With high-value vehicles, the cost of repairs or replacements might be greater if you get into an accident.

Your deductible amount

When you add collision coverage to your car insurance plan, you will need to choose a deductible. The deductible you choose will have a direct impact on how much you pay for the coverage, so be sure to choose it wisely.

Your coverage limit

The coverage limit you choose for your collision insurance will also influence your premium. The higher the limit, the higher your premium will likely be. That said, don’t skimp on your limit. You should ideally select a coverage limit that accurately reflects the value of your car.

How much should my collision coverage deductible be?

Speaking of deductibles, the deductible you choose for your collision coverage is one of the most important decisions that you will make.

A general rule of thumb in the insurance industry is the lower your deductible amount, the higher your premium, and the higher your deductible amount, the lower your premium. This means that if you select a higher deductible, you will pay less for your insurance policy annually. On the flip side, in the event of a claim, you will need to pay more. If you can afford a higher deductible, this is usually the way to go, especially if you want to keep your collision insurance rates low. Collision coverage deductibles usually range between $500 and $2,000 but vary between insurance providers.

When deciding which deductible is right for you, we recommend considering several factors, such as:

• 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 picking a collision coverage deductible, reach out to BrokerLink today. One of our licensed brokers would be pleased to offer a professional opinion on the right deductible amount for your vehicle, driving habits, and budget.

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, you are not legally obligated to add collision coverage to your policy.

The one exception to this is if you lease or finance your car and your leasing or financing company requires you to have collision coverage. If this is the case, then you will be contractually obligated to have a valid collision coverage policy until your lease is up.

Collision coverage vs. comprehensive coverage

There is one other type of optional coverage that people often confuse collision coverage with, and that is comprehensive car coverage. Like collision coverage or accident forgiveness coverage, comprehensive coverage is also optional.

However, comprehensive coverage is distinct from collision coverage in that it doesn’t cover accident-related damage. Rather, it covers damage from incidents other than collisions. Most comprehensive policies specifically cover the following perils:

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

If your car is damaged by an insured peril, you can file a comprehensive claim with your insurance provider and receive a payout to cover the cost of repairing or replacing your vehicle.

It is also important to note that comprehensive coverage is not government-mandated but might also be required by your leasing or financing company if you lease or finance your vehicle. Be sure to check the terms and conditions of your lease agreement to find out.

What is the difference between liability insurance and collision insurance?

While both liability insurance and collision insurance can protect against the cost of at-fault collisions, they are two distinct types of coverage.

Third-party liability insurance is mandatory in every Canadian province and territory. This means that it is illegal to drive without it. Many provinces even stipulate the amount of liability coverage that you must carry, e.g., a minimum of $200,000 in Alberta and Ontario.

Further, liability coverage can pay for all sorts of expenses relating to at-fault accidents, including medical expenses, repair bills, and legal fees. It is also designed to pay for the cost of the accident that the victim incurs, meaning that it will not cover accident costs incurred by the at-fault party, i.e. the policyholder.

Meanwhile, collision coverage is not government-mandated, and there is no minimum coverage amount that policyholders must purchase. In addition, it solely covers property damage, which means it will not pay for medical expenses or legal fees. It is also designed to cover accident costs incurred by the policyholder, whether they are at fault for the accident or not. Collision coverage will not cover accident fees incurred by the victim if they are not the policyholder.

Thus, collision coverage and third-party liability coverage complement each other well, which is why both are often recommended. Collision coverage fills the gap that third-party liability coverage leaves behind.

When should I remove collision coverage from my policy?

Collision coverage, while important, may not make sense for policyholders to have throughout the duration of their policies. Typically, this type of coverage makes the most sense for high-value vehicles. If a few years later, you reach a point where the cost of collision insurance is 10% or more than your car’s worth, it might be time to consider removing it.

A BrokerLink insurance advisor can help you modify your policy and remove any unwanted coverages, including collision coverage. The good news is that your premium will likely go down by removing coverage you no longer need.

That said, there might be times when keeping your collision coverage is still worthwhile or even required, such as if you lease or finance your car, have a long history of collisions, or prefer the added peace of mind that having collision insurance offers.

Mandatory car insurance coverage in Ontario

Now that you know a little bit more about collision coverage, let’s continue the discussion of car insurance coverage by diving into the mandatory coverage types in Ontario. Although you can usually choose if you want to add collision coverage to your auto insurance or motorcycle insurance plan, you will have no choice but to add the following types of coverage to your policy if you wish to drive legally in Ontario:

Third-party liability coverage

Liability car insurance is designed to pay for the cost of at-fault collisions that result in property damage or bodily injury. If the policyholder is responsible for an accident, they can file a liability coverage claim to pay for any repair bills or medical expenses incurred by the victim. Third-party liability coverage can also pay for any legal fees that might arise, including defence and settlement fees.

Accident benefits coverage

Accident benefits coverage can pay for the cost of medical or rehabilitative care if someone is injured in a car accident. This type of coverage can reimburse the policyholder for medical treatment, like physical therapy or prescription medication, as well as funeral fees and lost income.

Direct compensation coverage

Direct compensation coverage is a type of property damage coverage that will pay the policyholder to repair their car if it is damaged in an accident. The only catch is that the accident cannot have been the policyholder’s fault.

Uninsured automobile coverage

Uninsured automobile coverage, also known as uninsured motorist coverage, can cover you if you get into an accident with an at-fault driver who either doesn’t have insurance or does not have enough coverage to pay for the cost of the accident. This type of coverage can also help if you are the victim of a hit-and-run accident.

Other types of optional car insurance coverage in Ontario

As you now know, collision coverage is just one of many types of optional coverage available to Ontario drivers. A few other types of popular optional coverage are as follows:

Comprehensive coverage

Comprehensive car insurance covers risks unrelated to accidents. The reality is that there are several other ways that a car can be damaged. For example, it can be stolen, it can be the victim of vandalism, a tree branch could fall on it, or a fire could break out and damage it. That’s where comprehensive coverage comes in. With this type of insurance added to your policy, you will be protected should a non-collision-related incident occur. Comprehensive coverage specifically protects against a list of insured perils, which will be clearly named in your policy. The most common perils covered by comprehensive insurance include theft, vandalism, fire, falling and flying objects, explosions and riots, and weather-related events. If damage occurs due to one of these circumstances, you can file a comprehensive claim with your provider and receive a payout to cover the cost of replacing or repairing the vehicle.

Accident forgiveness coverage

One more type of optional car insurance coverage popular among drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim. Note: coverage and eligibility vary by province.

Waiver of depreciation

A waiver of depreciation will help you pay to replace your car if it is totalled in an accident and the insurance company deems it a write-off. Without a waiver of depreciation, you might still receive an insurance payout, but it would likely be much less than with one.

Loss of use coverage

Loss of use coverage offers financial security in the event that you are temporarily without your car after an accident. For instance, if your car is damaged in an accident and needs to go into the shop for repairs, you will need to find other ways of getting around during this time. Hiring a rental car or taking taxis for a week or more can add up. However, with loss of use coverage, you can file a claim and have your insurance company reimburse you for any transportation expenses incurred during this time. Just make sure that you are aware of your loss of use coverage limit and don’t exceed it.

Tips to find cheap car insurance in Canada

If you decide to add collision coverage to your policy, then the odds are that your premium will go up. There are ways to mitigate this insurance premium increase. Here at BrokerLink, we have all the best tips to make your policy as affordable as possible. Continue reading for a list of money-saving tips:

Pay for your policy annually

Paying for your policy annually can help you avoid pesky administrative or transaction fees that are sometimes tacked on to monthly payment schedules. So even if your insurance company gives you the option of paying for your plan monthly or yearly, be sure that you inquire about any extra fees that may come from choosing the monthly option.

Raise your deductible

Raising your deductibles, whether it’s your collision coverage deductible or your third-party liability coverage deductible, can help you reduce your premium. Higher deductibles translate to more financial responsibility on behalf of the policyholder in the event of a claim. By agreeing to this, your insurance provider is likely to lower your rates upfront.

Insure multiple cars together

If you have a household with more than one vehicle, insure them at the same time, and you could qualify for an auto insurance discount on each policy.

Bundle and save

Bundling multiple insurance products together can also result in major savings. Types of bundles that might be available include home and auto insurance bundles or auto and recreational vehicle insurance bundles. Contact BrokerLink to find out more about how bundling works and how much money you can save.

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Ask about other car insurance discounts

It never hurts to ask! If you are looking to cut insurance costs, ask an insurance broker about other car insurance discounts that may be out there. For example, you could qualify for an employment or education-based discount or another type of discount, like a winter tire or safe driver discount.

Put winter tires on your car

Installing winter tires on your car is the next way that you can qualify for cheaper auto insurance rates. Many Ontario insurance companies now offer discounts to drivers who add snow tires to their cars during the winter months. This is due to the added safety that these tires offer, which can reduce your chances of getting into a collision. Just make sure that you meet the insurance company's conditions if you want to qualify for this discount, such as installing the tires by a certain date and having all four tires be the same model.

Review your car insurance coverage annually

Remember how we mentioned that there might come a time when it makes sense to remove your collision coverage? This is the case for other types of coverage, too. Just because you have a certain type of coverage on your plan for the first year or two doesn’t mean that you should keep it forever. By removing coverages you no longer need, reducing coverage limits, or raising deductibles, you can save money on car insurance.

Attend driving school

Attending driving school is the next way that you can save money on your car insurance plan. Whether you’re a new driver or want a refresher, if you sign up for a driver’s education course or a defensive driving course and can show proof that you completed it, your insurance company might give you a discount on your policy.

Become a safer driver

Follow these safe driving tips and you might just qualify for cheaper rates. The safer you drive and the cleaner your record, the better your rates are likely to be. If you maintain a clean record for a number of consecutive years, you might even be eligible for a safe driver discount.

Go hybrid or electric

If you are buying a new car, consider going with a hybrid or electric vehicle. Why? In addition to the gas savings, you could qualify for a cheaper premium. Many insurers now offer discounts to those who drive eco-friendly cars.

Contact BrokerLink to learn more about collision insurance

If you want to learn more about how collision insurance works or want an expert opinion on whether collision coverage is worth adding to your car insurance policy, reach out to BrokerLink today.

We have a team of licensed insurance brokers who would be pleased to review your policy and offer a personalized recommendation on the best types of optional coverage for your needs, whether that be collision coverage, comprehensive coverage, or another type of coverage entirely. In addition to recommending coverage, we can also suggest coverage limits and deductibles.

Plus, as a full-service auto insurance brokerage, we can shop around and find the most affordable collision coverage for your needs.

Reach out to BrokerLink today to get started and request your free car insurance quote. We can be reached by phone, email, or in person at any one of our 200+ locations in Canada. Requesting a free quote takes as little as five minutes!

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FAQs about collision insurance

Can anyone add collision coverage to their car insurance policy?

Yes, most insurance companies offer some form of collision coverage that is available to all customers. The cost of adding this type of coverage to your policy will vary so be sure to request a free quote before adding it to your plan.

What doesn’t collision insurance cover?

Collision insurance does not cover incidents other than collisions. For example, it does not cover theft, vandalism, or damage caused by weather-related incidents. These coverages would fall under comprehensive insurance. It also only covers property damage claims, so if you are injured in a car accident, collision insurance will not cover you. It also won’t cover you if a lawsuit is brought against you.

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

Most likely. At-fault accidents nearly always result in premium raises unless you have accident forgiveness coverage. While collision coverage can help pay for the cost of repairs following an at-fault collision, you should expect to pay more for car insurance the next time that your policy is renewed.

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

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

Can I get a free car insurance quote?

Yes. Reach out to an insurance broker or insurance company to request a free quote today. Most insurers now offer free quotes to prospective customers with no strings attached. Be sure to confirm that the quote has no strings attached at the time that you request it.

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