Collision insurance: What it covers and how to know if it’s right for you
If you’re involved in a road accident, there can be serious financial consequences. Just think about how much it could cost to repair major damage to your vehicle—or replace it. Collision insurance is an optional coverage you can add to your car policy. Although it's not required, this coverage can make a difference in the event of an accident.
Is collision insurance right for you? Find out what a collision auto insurance policy covers, what determines the cost and how to choose the coverage that’s right for you.
What is collision car insurance?
Collision car insurance, also known as auto collision insurance, is an optional coverage you can add to your car insurance policy. This protection can help you avoid paying a lot out of pocket to repair or replace your vehicle. Want to find out more about how it works? Let’s take a look at what it covers, how the deductible factors into a claim and what to expect if you need to make a claim.
An add-on, not a different policy
Collision insurance isn’t a separate policy. It’s an optional coverage that pays for property damage to your vehicle if it collides with other vehicles or objects. It supplements your basic civil liability coverage without replacing it.
How do collision claims work?
To start the claims process, you need to open a claim. With Desjardins Insurance1, you can open one in the Desjardins Insurance Home-Auto app or by phone. Then your insurance company uses your statement and location of damage to your vehicle to determine what happened and, if applicable, who is responsible. Next, your insurer assesses the damage to determine how it can be repaired—or if it’s a total loss. Any settlement is calculated based on the coverage provided by your policy and may be based on the actual cash value of your vehicle. If your vehicle is declared a total loss, the amount you receive is calculated based on the value of your vehicle at the time of the accident.
Your insurance deductible is the amount you have to pay when you make a claim for vehicle damages. For example, if you have a $500 deductible, you’d pay the first $500 of the vehicle repair costs. Your insurance provider would cover the rest. Generally, if you choose a higher deductible amount, it lowers the premium you pay for your car insurance. If you opt for a lower deductible amount, you’ll pay a higher premium.
What collision insurance covers
Collision insurance covers losses incurred if you’re involved in an accident with another vehicle or a stationary object. Depending on your policy provisions and the province where the policy is issued, damage resulting from a hit-and-run may also be covered.
When collision coverage applies
Collision insurance covers damage to the vehicle, not bodily injury to the people involved. In other words, your car is covered if, for example, you hit another vehicle or a stationary object like a street light, a road sign or a highway guard rail, or if you veer off the road and roll into a ditch, or if you accidentally back into your garage door. Depending on your province, this coverage may apply if you collide with a person or an animal.
When collision auto insurance doesn’t apply
This insurance does not cover events that aren’t directly related to a collision or rollover (“upset”) of your vehicle. In other words, you’ll be covered for fender benders, but you won’t be covered for things like theft or attempted theft, vandalism, fire or hail damage. To cover additional risks, comprehensive insurance can be a helpful option. Learn about the different types of coverage available for car insurance.
What are the differences between collision coverage, third-party liability coverage and comprehensive coverage?
Basically, third-party liability insurance covers claims against you for injuries to others and damage to their property if you’re responsible for an accident. On the flip side, collision insurance protects your vehicle in the event of collision or upset.
Lastly, comprehensive coverage (also known as all perils coverage) protects your vehicle against windshield damage, hail, theft and vandalism, among other things.
| Coverage | What it covers | Mandatory? | Optional? |
|---|---|---|---|
| Third-party liability coverage | Damage you cause to other people or their property when you are responsible for an accident | ✅ Yes (in all Canadian provinces) | — |
| Collision coverage | Vehicle damage resulting from collision or upset | ❌ No (except for financed or leased cars) | ✅ Yes |
| Comprehensive coverage | Damage to your vehicle not related to a collision (theft, fire, hail, vandalism, etc.) | ❌ No | ✅ Yes |
| Specified perils coverage | Risks specifically named in the contract | ❌ No | ✅ Yes |
Depending on your coverage needs and your situation, you can combine one or more optional coverages.
Is collision coverage right for you?
Collision coverage is worth it if your vehicle has a high value or if you couldn’t afford to repair or replace it after an accident. It might also be a good choice if you use your vehicle every day and want to avoid a significant financial loss if something unexpected happens. Before you choose, it’s a good idea to think about your needs based on factors like how you use your vehicle and how much it’s worth.
When is collision coverage mandatory?
Collision coverage is mandatory when you finance or lease a vehicle. Because the vehicle serves as collateral for the financing or lease agreement, the lender or leasing company requires collision coverage to help protect its value. But if you own your vehicle outright, this coverage is optional.
Factors to consider before adding collision coverage
If you own your vehicle, the decision to take out collision coverage will depend on your needs and your financial situation. It might come in handy if your vehicle has a high value. The newer and more expensive it is, the more it will cost to repair or replace in the event of an accident.
Your ability to absorb a financial loss is also a key factor. If you don’t have enough money readily available to repair or replace your vehicle, collision car coverage can ease the financial impact of an accident and give you peace of mind.
It’s also worth considering how you use your vehicle. If you rely on it to get to work or school, or if you need it for everyday errands, the financial impact of an accident might be harder.
Weighing cost against peace of mind
Whether or not you decide to add collision auto coverage is a personal choice. It depends on your risk tolerance. You might want to weigh up a few different factors to help you decide if this coverage is right for you. In practice, it’s often a trade-off. Do you want to pay a higher premium now for greater coverage—or pay a lower premium and accept the risk that a smaller portion of a future claim may be covered, resulting in higher out-of-pocket expenses?
How much does collision coverage cost?
There’s no standard car insurance rate for collision. The amount you pay depends on a number of things related to your vehicle—and to you as the driver. Some of the main factors are the value of the vehicle, your driving record, where you live, how you use your vehicle and the deductible you choose.
Generally, a higher collision deductible lowers your insurance premium, because you agree to assume a bigger share of the costs in the event of a claim. On the flip side, a lower deductible usually means you pay a higher premium, but your out-of-pocket cost will be less in the event of an accident. To better understand how your premium is calculated, here are some of the factors that influence the cost of car insurance.
Everyone’s situation is different, so one of the best ways to find out the cost of collision car insurance is to get a personalized quote online. That way, you can compare your options and choose what’s best for your needs and your budget.
Collision coverage: The pros and cons
The pros
- Collision insurance covers the cost of repairing or replacing your vehicle.
- It can help protect you against a significant financial loss.
- It’s mandatory if you lease or finance your vehicle.
- It may also apply in the event of a hit-and-run.
The cons
- Choosing this coverage makes your insurance premium higher.
- It might not make sense if your vehicle has a low market value.
- The amount payable for a claim is generally limited to the actual cash value of the vehicle.
Other endorsements and additional coverages to consider
Collision insurance covers damage caused to your vehicle in an accident. Depending on your needs, you can also choose other optional coverages.
For example, a replacement cost endorsement helps protect a new vehicle against depreciation for up to five years. If your vehicle is declared a total loss, you could receive a new vehicle with similar features. With this coverage, if certain parts are damaged beyond repair, they’ll be replaced with new original equipment manufacturer (OEM) parts.
Comprehensive coverage can also be an attractive option. It covers certain types of losses that aren’t related to a collision, for example, if your car is stolen from your driveway. This option typically offers good value for money.
Replacement vehicle coverage can help you stay mobile if your vehicle is unusable following a covered loss. If you have this protection as part of your policy, you may be able to use a replacement vehicle while your vehicle is being repaired or is otherwise unavailable due to a covered loss.
Together, these options help provide more comprehensive protection for your vehicle—and peace of mind for you.
Get a quote for collision car insurance
The cost of collision auto coverage (and how useful it might be) is different for everyone. It depends on the value of your vehicle, the amount of the deductible you choose, your budget and your risk tolerance. It’s important to get a personalized quote, so you can consider your options and compare different levels of coverage. That way, you can find the right protection for your needs and your financial situation. Get a quote online to find out more about your coverage options and make an informed choice.
FAQ – Your questions about collision insurance
Collision insurance is an option you can add to cover damage to your vehicle in the event of collision or upset. It can cover your vehicle if you’re involved in an accident with another vehicle or object. In some cases, you’re also covered if your vehicle is damaged in a hit-and-run by an unidentified driver. If you make a claim, you’ll typically be responsible for paying the deductible specified in your policy. This coverage does not cover damage caused to others, which usually falls under third-party liability insurance.
La protection collision couvre les dommages subis à la suite d’un impact avec un autre véhicule, un objet ou lors d’un renversement. La protection risques multiples protège plutôt contre événements comme le vol, le vandalisme, l’incendie ou les aléas de la météo. Combinées, ces protections permettent de couvrir un plus large éventail de situations pouvant endommager votre véhicule.
No, collision coverage is not a legal requirement. That said, if you’re leasing or financing your vehicle, you generally do need it. Otherwise, the decision is yours. It’s important to consider the pros and cons of collision insurance, so you can decide if it’s a fit for you based on the value of your vehicle and your financial situation.
It all depends on the market value of your vehicle. If the annual premium for the coverage plus the amount of your collision deductible is about what the car is worth, it might not be worth it. Everyone’s situation is different, so feel free to ask an insurance advisor.
Depending on your insurance policy and the provincial regulations where you live, the amount payable for your claim may come from different sources if you’re involved in an accident with another motorist and are found to be not at fault. That’s why there is a clear distinction between situations when the person insured is at fault and when they’re not at fault. If you’re involved in an accident, contact your insurer as soon as possible to find out what applies in your situation and what to do.
If an unidentified driver damages your vehicle, collision insurance may cover the damage, depending on the provisions of your policy. If you’re involved in an incident, contact your insurance company as soon as possible to find out what applies in your situation and what to do.
Keep reading
These tips are provided for information and prevention purposes only. They are general in nature, and Desjardins Insurance cannot be held liable for them. We recommend using caution and consulting a certified insurance agent for comprehensive, tailored advice. The terms and conditions of the coverages described are set out in the insurance policy, which always prevails.
Auto Insurance is not available in MB, SK and BC due to government-run plans.
1 Desjardins Insurance refers to Desjardins General Insurance Inc. in Quebec and Certas Direct Insurance Company or Certas Home and Auto Insurance Company, underwriter of automobile and property insurance in other provinces and territories.