Auto insurance 101: Collision car insurance
two people in a collision

We know we say this a lot – but even good drivers can get into a car accident. In fact, in 2020 there were 43,353 vehicles involved in fatal and personal injury collisions – and that’s just in Ontario 1. No matter how careful you are behind the wheel, icy conditions, distracted drivers and busy roads mean there’s always a chance of an accident. Your liability coverage on your car insurance covers you if you’re sued for a physical injury or for damaging someone else’s property. And, your accident benefits provide compensation if you, your passengers, or a pedestrian are injured in a car accident. But how will you pay for repairs if your car is damaged – or worse, if it needs to be replaced? That’s where collision car insurance comes in. We’re here to help you understand how it works and why (or if) you need it.

What is collision car insurance? 

Collision auto insurance is an optional coverage that pays for damage to your vehicle as a result of a collision with another object. The accident could be with a stationary object (a single-car accident, like if you hit the guard rail on the side of the highway) or with another car.

How collision car insurance works 

If you have collision insurance, your insurer could pay to fix or replace your vehicle. First, you’ll have to pay your collision deductible. Your insurance provider will cover the rest of the cost.

But, it’s not as clear cut as it sounds. Let’s take a look at a few accident scenarios that’ll help you understand what happens if you do – or don’t – have collision coverage.

Here’s what could happen if you’re in an accident with another car:

If you’re at fault and have collision insurance. If you hit another vehicle and it’s your fault, the damage to your car will be covered. As mentioned above, you’ll have to pay your deductible first – then, your insurer will pick up the remaining cost. Your premium may increase at renewal.

If you’re at fault and don’t have collision insurance. If you get into a car accident without collision and you’re at fault, you’d have to pay out of pocket for all costs to repair – or replace – your vehicle.

If you’re not at fault and have collision insurance. If you live in Alberta, Quebec, Nova Scotia, New Brunswick, Newfoundland, or P.E.I, DCPD (Direct Compensation Property Damage) will compensate you if your car is damaged in an accident that you didn't cause. DCPD is mandatory and automatically included in these provinces. If you live in Ontario, as of January 1st, 2024 it’s offered but no longer mandatory. But it’s highly recommended – because who wants to pay for repairs from a fender bender if it wasn’t their fault?

If you’re not at fault and don’t have collision insurance. DCPD applies in this situation as well, up to the extent that you’re not at fault. If you’re any percentage at fault and you don’t have collision, you’ll have to pay for that percentage of repairs out of your own wallet. For example, if you’re 50% at fault, you’ll have to pay for 50% of the cost of repairs. DCPD will cover the remaining 50%.

Heads up! An accident isn’t always 100% one driver’s fault. Drivers can share fault. If you’re any percentage at fault, that percentage will be covered by collision. For example, if you’re found to be 40% at-fault, 40% of your claim would fall under collision and 60% under DCPD. This means you’d also have to pay 40% of your collision deductible and 60% of your DCPD deductible (if applicable – generally, people don’t have a deductible on DCPD).

And, here’s what could happen if you’re in a single-car accident:

Collision with a stationary object and you have collision insurance.
 Let’s say you swerve off the road and crash into a telephone pole. It’s not common knowledge, but most single-car accidents are considered at-fault. This means any damage to your vehicle from hitting the pole would be covered by collision – if you have it, that is.

Collision with a stationary object and you don’t have collision insurance: You guessed it – if you don’t have collision, you’re responsible for paying the full cost for any damage to your vehicle.

Did you know? DCPD is a mandatory coverage in provinces where it applies.

Do I need collision insurance? 

Unless you have the financial security to pay for repairs or a new vehicle out of pocket, it’s in your best interest have collision insurance – especially if you have a newer car. If you own your car outright, collision coverage is optional. But if you’re leasing or financing your car, then it’ll probably be required as part of your contract.

Do I need collision coverage on an older car? 

It’s up to you. If your 10-year-old car’s paid off and not worth much, it might make sense to drop your collision since the max amount your insurer will pay is the actual cash value. You can also remove it if you’re just going to get a new car anyway if something happens to it.

Calculate if having collision coverage is worth it in the long run. If it costs more yearly to pay for collision coverage than it would to replace your car it’s probably not worth it. And that brings us to our next question…

Is collision coverage worth it? 

In our opinion, yes! Unless you’re driving an older car you wouldn’t repair or replace (like we talk about above), it’s worth the peace of mind knowing you have something to fall back on.

What is the average cost of collision insurance? 

It’s tough to predict the exact amount it’ll cost you to add collision coverage to your car insurance.

First, let’s look at how insurance premiums are calculated overall. To determine your premium, an insurer could look at factors including your age, where you live, your driving record (more tickets mean more expensive insurance), what you use your car for (and how often you drive it), and even your car’s safety features. And, costs vary based on what insurance provider you’re with. Even if two drivers own the exact same car, they won’t be paying the same premiums. So, it’s normal for your price to be different from your neighbour’s.

When it comes to collision specifically, though, an insurance provider might look at the following:

    • Cost for parts if they need to be replaced. If your car is a higher end or foreign model, it could cost more to source and install replacement parts. And with newer technology, certain replacement parts on new vehicles can even exceed the cost of your deductible.
    • Cost of the vehicle itself. Again, if you’ve got a more expensive vehicle, it could cost more to replace if there’s a total loss. For this reason, adding collision to these types of cars could cost more in premium.
    • The make and model of your car. Statistically, some cars have more collision claims filed for accidents. Your insurer will take this into account when calculating your cost. Want to see how your car measures up? Visit the Insurance Bureau of Canada’s website to find your vehicle.

Did you know? Older cars aren’t necessarily cheaper to insure. Insurers still have to look at things like your age and driving record – so your car’s age is actually just one factor when it comes to calculating your insurance cost.

Collision vs. comprehensive auto insurance – what’s the difference?

In a nutshell, collision covers damage to your car after a collision with an object or another car, while comprehensive protects your car from damage that’s caused by things other than an accident (like fire or a windstorm). Check out our info-packed blog (and video!) to find out more.

Does my collision or comprehensive insurance cover a hit and run (like in a parking lot)? 

Even though you’re not at fault in a hit and run, this type of accident could be covered by your collision insurance. If you don’t have collision and you’re involved in a hit and run – even if you’re not at fault – you won’t be covered. Keep in mind, hit and runs typically need to be reported to the police within 24 hours to qualify as a not-at-fault accident.

No matter what the situation, if you’re thinking about changing or removing coverages it’s a good idea to talk to your insurer first to be sure you’re making the right move. Having the right policy for you and your vehicle will save you from a whole lot of stress and financial strain if you ever get into an accident.

Coverage your car’s always wanted at a competitive price. Mitchell data confirms increased Canadian collision costs Preliminary 2020 Ontario Road Safety Annual Report Selected Statistics