Do I Need Collision Insurance Coverage for my Vehicle?

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.

How is collision coverage different from comprehensive coverage?

So, what happens if your car encounters damages that are not collision-related? This is where comprehensive coverage comes into play.

Comprehensive coverage is also a type of insurance. It covers damages to your car that are not caused by a collision. Comprehensive coverage protects your car against:

  • Weather-related damage - flood, fire, wind, and hail
  • Damage from falling trees or objects
  • Hitting animals like deer
  • 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 if it is beneficial to have comprehensive coverage or not, factor in all your costs (maximum payout, deductible, replacement cost, etc.) and consider the impact on your finances before a 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.

Legal

All coverages are subject to compliance with the Statutory Conditions outlined in your policy.
1 You would still have to pay the deductible stated in your insurance policy. Please refer to your insurance certificate for further details.
2 Please refer to your policy for further details regarding specific benefits for your province.
3 Damages to your vehicle would be covered if you live in a province where DCPD exists (Ontario, Nova Scotia, PEI, New Brunswick, Quebec).