Collision coverage pays to repair or replace your vehicle after an accident, regardless of who was at fault. While not legally required in Ontario, it's essential protection if you want your insurer to cover damage to your own vehicle when you cause an accident.
What Does Collision Coverage Cover?
Collision coverage protects your vehicle when it collides with another object or vehicle, or rolls over. Covered incidents include:
- Collisions with other vehicles: Whether you're at fault or fault cannot be determined
- Single-vehicle accidents: Hitting a tree, pole, guardrail, or building
- Rollovers: Even without hitting another object
- Potholes: Damage from hitting a pothole (in most cases)
- Parking lot accidents: Including hit-and-runs in parking lots
What Collision Coverage Doesn't Cover
Some situations fall outside collision coverage:
- Theft or vandalism: Requires comprehensive coverage
- Weather damage: Hail, flood, falling branches (comprehensive)
- Animal collisions: Hitting a deer is typically comprehensive
- Mechanical failures: Engine or transmission problems
- Wear and tear: Normal deterioration
- Personal belongings: Items in your vehicle have limited coverage
How Collision Coverage Works
Filing a Claim
- Report the accident to your insurer promptly
- Provide details: what happened, where, when, other parties involved
- Document the damage with photos
- Get a damage assessment (adjuster or repair shop estimate)
- Pay your deductible
- Receive payment for repairs or actual cash value
Understanding Deductibles
The deductible is what you pay out of pocket before insurance covers the rest. Common collision deductibles:
- $500: Most common choice, balances premium and out-of-pocket costs
- $1,000: Lower premium, higher out-of-pocket
- $300: Higher premium, lower out-of-pocket
Choosing your deductible: If you have a $1,000 deductible and $3,000 in damage, you pay $1,000 and insurance pays $2,000. Choose a deductible you can comfortably afford.
Actual Cash Value vs. Repair Costs
Collision coverage pays the lesser of:
- The cost to repair your vehicle, OR
- The actual cash value (ACV) of your vehicle
If repair costs exceed your vehicle's ACV, it's declared a "total loss" and you receive the ACV minus your deductible.
When Is Collision Coverage Required?
Collision coverage isn't legally required in Ontario, but it may be required by:
- Auto loan lenders: Banks and credit unions require collision coverage until the loan is paid off
- Leasing companies: Leases always require collision coverage
Once your loan is paid off, carrying collision becomes your choice.
When Does Collision Make Sense?
Consider collision coverage if:
Your Vehicle Has Significant Value
If your car is worth more than you could afford to replace out of pocket, collision coverage provides important protection.
You're Financing or Leasing
You'll be required to carry it anyway, and you'd be stuck with payments on a damaged vehicle without it.
You Have a Newer Vehicle
Newer vehicles have higher values and are more expensive to repair.
You Can't Afford a Large Unexpected Expense
Collision provides predictability—you know your maximum out-of-pocket cost is your deductible.
When to Drop Collision Coverage
Consider dropping collision when:
- Your vehicle's value has dropped significantly: If the ACV is low, your payout would be minimal after the deductible
- Annual premium approaches vehicle value: If you're paying $500/year for a vehicle worth $2,000, the math doesn't work
- You have emergency savings: You could replace the vehicle if needed
Rule of thumb: Consider dropping collision when your vehicle's value falls below 10 times your annual collision premium.
Collision Coverage Costs
Factors affecting your collision premium:
- Vehicle value: Higher value = higher premium
- Deductible amount: Higher deductible = lower premium
- Driving record: At-fault accidents increase costs
- Vehicle safety features: Some features earn discounts
- Age and experience: Newer drivers pay more
Collision vs. DCPD: Understanding the Difference
Ontario's mandatory Direct Compensation - Property Damage (DCPD) coverage and collision coverage are related but different:
- DCPD: Covers your vehicle damage when ANOTHER Ontario driver is at fault
- Collision: Covers your vehicle damage when YOU are at fault (or fault cannot be determined)
Without collision coverage, you have no protection for your own vehicle damage when you're at fault.
Making the Right Choice
Collision coverage is a significant portion of your auto insurance premium. To decide if it's right for you:
- Know your vehicle's current market value
- Get quotes with and without collision
- Consider your financial ability to replace the vehicle
- Check if your lender requires it
- Evaluate your driving environment and habits
Compare quotes to find the right balance of coverage and cost for your situation.