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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.