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What is Collision Insurance in Canada?

Collision insurance is an extra you can add to mandatory car insurance that is required in Canada.

You can add this coverage onto the following insurances:

  • direct compensation property damage insurance
  • third-party liability insurance
  • statutory accident benefits coverage
  • uninsured automobile coverage.

You can add this insurance to most policies to ensure your vehicle is protected if you’re involved in an accident.

For example, if you’re responsible for a crash with this insurance, your car will be covered, and you won’t have to pay for any additional repair costs.

This also includes collisions in which the other motorist has attempted a hit and run on you and has driven away. But this is only if it’s reported to the police imminently and you have records to show the insurance company.

What is Covered By Collision Insurance?

You should now have a small understanding of how collision insurance works, but let’s dive deeper into what it generally covers. Collision insurance covers any damages that may occur on your vehicle if you hit either a car or property of someone else. As an example, if you were to reverse into someone else’s car, van or truck, the damages that have happened to your car in the process will be covered by collision insurance, and you won’t have to pay anything out of your pocket.

It’s a legal requirement to have some third-party insurance covering other road users or pedestrians if you were to collide with them. So, in conjunction with collision insurance, you’ll be covered in all aspects, including the third-party member and also yourself.

Why Should I Get Collision Coverage?

I regularly see that people aren’t sure if they should purchase collision coverage or not. Let me tell you what I personally think. It has been statically proven in Canada that there are around 150,000 – 200,000 car-on-car or none-car-on-car accidents each year. Not all, but most of the accidents recorded are between two vehicles, and if you’re at fault for this crash, your vehicle will not be covered by most basic mandatory policies.

Personally, I would decide depending on the price of my car. Some cars aren’t worth getting collision coverage for because they are low-priced. As a rule of thumb, I would consider collision coverage if my car was 10 years old or newer and if the market value exceeds over $5,000. Going of these recommendations should give you a better understanding if you should purchase this type of insurance.

Remember, collision coverage isn’t required to be legally insured to drive on a Canadian road. It’s simply an add-on that users can opt-in to cover their own vehicle if an accident was to happen. However, if you’re leasing or financing a vehicle, you’re lender may ask you to purchase collision coverage to support their decision to provide you with the funds or vehicle. Only in this scenario will collision coverage be a legal requirement.

Come to discuss that topic in our Facebook Group!

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