Do I Need Collision Insurance Coverage for my Vehicle?

Etobicoke Office

What's collision coverage?

Collision insurance is a type of coverage on your insurance policy. Let's say your car came into contact with another vehicle, or object (e.g. underground parking post, garage door, street sign), and was damaged somehow. If you had collision coverage, the cost to repair or replace your vehicle would be taken care of1. It wouldn't matter who was at-fault for the accident – with collision coverage, you'd be covered for the most part1.

Specific benefits vary from province-to-province, but the overall benefit of having collision coverage is that there would be no out-of-pocket expenses2, except for the deductible and perhaps, a rental car.

Deductible: What you have to pay out-of-pocket first, before TD Insurance picks up the rest. Deductibles can vary in range starting from $500 to upwards of $5000. TD Insurance Advisors will work with you to help you determine the right deductible when you purchase your insurance policy.

So, when should you choose collision coverage?

If you finance or lease a vehicle, then it is mandatory to have collision coverage. However, if you own your car then you have the option of removing it.

When considering if you should choose collision coverage or not, take these three factors into account:

  1. Car value
  2. Deductible amount
  3. Personal financial situation (i.e. the potential impact on your finances as a result of removing collision coverage and then having to pay out-of-pocket to repair or replace your vehicle)

Things to consider:

  • The maximum amount TD Insurance will pay out if you're involved in an at-fault accident and your vehicle is unrepairable and written off.
    • Without collision coverage, you would need to evaluate your financial situation. Would it be possible for you to save that money during the year and either replace your vehicle out-of-pocket or pay for significant repairs entirely, if the car was repairable?
  • The cost of collision coverage weighed against the value of your car and chosen deductible.
    • Example: If you had a 10-year-old car that was worth about $1000 and your deductible was $1000, collision coverage would not be beneficial.
Scenario: If your car was written off or there were significant repairs
Do you have collision coverage?
Are you at-fault?
Are you covered?
YES
YES
YES1
YES
NO
YES
NO
YES
NO
NO
NO
*YES3

*Note: The exception to this is if you are hit by an "unidentified third party" (hit-and-run). Even if you are not at-fault, without collision coverage, you would not be covered!


If I am not at-fault for an accident and I don’t have collision coverage, am I still covered?

Yes – if you don't have collision coverage and you're not at-fault for an accident, damages to your vehicle would still be covered3.

In cases where there is a hit-and-run, you would be covered under the collision coverage portion of your insurance – if you had collision coverage. As mentioned above, even if you are not at-fault, without collision coverage you would not be covered during a hit-and-run.

Comprehensive vs. Collision Coverage: What's the difference?

We now know that collision coverage will help protect you and your vehicle if you were to get into an accident with another vehicle or object, or a hit and run by a third party. But what happens when your car encounters damage from a non-collision related incident? This is where Comprehensive coverage will kick in, which covers damage or loss to your car that are not caused by a collision. Comprehensive coverage can protect your car against:

  • Weather-related damage — flood, fire, wind, and hail
  • Damage from falling trees or objects
  • Damage caused by hitting an animal
  • Theft & vandalism
  • Explosion

Just like collision coverage, if you finance or lease a vehicle, then it is mandatory to have comprehensive coverage. However, if you own your car then you have the option of removing it. Before deciding whether to keep/remove comprehensive coverage, factor in all your costs (maximum payout, deductible, replacement cost, etc.) and consider the impact on your finances before making a decision.

Since older cars may cost less…does that mean my insurance will be lower?

Just because you drive a used car, does not mean that your insurance premium will automatically be reduced. Keep in mind that the cost of car insurance depends on several factors, such as:

  • The type of vehicle you drive
  • Vehicle theft rate
  • The insurance coverage you purchase (such as the amount of your deductible)
  • Your driving experience (new driver vs. experienced driver with a good driving record)
  • Where you live

When you take all factors into consideration, the age of the vehicle is only a small factor in the overall price of car insurance.

Whether you're an existing TD Insurance customer looking for a new car, or you're looking to add Collision coverage to an existing vehicle you own, you can review and manage your policy any time on MyInsurance. If you're looking to get started with TD Insurance, simply get a quote in minutes to see what a customized policy could look like for you.