What Does Collision Insurance Cover?

In 2022 there were 1,931 Canadian car collision fatalities - which is the highest number in the last decade. With incidents like this on the rise, it's essential to understand what collision insurance is and if you're covered.

Have you ever wondered if you need collision insurance? Or perhaps you're deciphering what the difference between comprehensive and collision coverage is?

That's alright, we know that insurance coverage and claims get complicated. We'll tell you the specifics of collision insurance, discuss when it’s necessary, and explain how it differs from comprehensive coverage.

Buckle up and read on to ensure you’re well-informed, covered and protected on the road!

What is Collision Insurance Coverage?

Collision coverage helps pay for the cost of repairing or replacing your vehicle, This amount is up to its actual cash value if it collides with another vehicle, the ground, an object (such as a guard rail) or any road surface.

This coverage from ICBC helps pay for your vehicle repairs, towing, storage, and more, even if you were responsible for the crash.

Additionally, this coverage extends to vehicle damage caused by an unidentified driver (also known as a "hit and run").

Can All Drivers Get Collision Coverage?

Some customers with a history of at-fault crashes may only be able to buy collision insurance with a high deductible or may not qualify for this coverage at all.

Talk to your auto insurance broker to find out more about collision coverage and if you qualify for it.

Do I Need Collision Insurance?

If you have a financed or leased vehicle, collision coverage is a must. However, if you own your car outright, it's optional. Note that rental car companies tend to have their own policies around collision and liability coverage.

To decide if you need collision insurance, consider the following factors:

#1: Your Car’s Value

Is your car worth enough to warrant the cost of collision coverage?

If your vehicle is older and has a lower market value, the insurance premium might not be justified.

#2: Your Deductible Amount

Consider the deductible you’d have to pay in the event of an accident.

Your deductible amount is the amount of cash you pay out of pocket before your collision insurance comes into play.

For example: Let's say your vehicle repair or replacement cost is $10,000. If your deductible is $1,000, that means you pay $1,000 before your insurance pays the remaining $9,000 to fix your vehicle.

A higher deductible can lower your premium but means more out-of-pocket costs if you need to file a claim.

#3: Your Financial Situation

Ask yourself: can you afford the worst-case scenario?

If your car is totalled and you're at fault, can you handle the expense of replacing it without insurance coverage?

Examples When Collision Insurance Helps Pay for Repairs

Example 1: Imagine you accidentally rear-end another vehicle at a stoplight. Let's suppose you're found at fault for the accident. Collision car insurance would pay for the repairs to your vehicle, regardless of fault.

Example 2: Image another scenario: Your parked car is damaged by a hit-and-run driver. Collision insurance covers the repair costs even when the responsible party is unidentified.

These examples show how valuable collision insurance can be in protecting you from unexpected expenses.

Comprehensive vs. Collision Insurance: What’s the Difference?

Comprehensive insurance covers incidents that are not collision-related. This includes damage or loss to your car caused by environmental factors or other non-collision events.

Here are Common Comprehensive Coverage Scenarios:

• Weather damage: Fires, floods, strong winds, snow, and hail
• Falling objects: Rocks, trees, etc.
• Damage from colliding with an animal
• Vehicle theft and vandalism
• Explosions

Remember that collision insurance specifically covers damages resulting from collisions with another vehicle, an object, or the ground. Always talk to your broker if you have questions on signing up for both and getting comprehensive collision insurance coverage.

If you’re financing or leasing your vehicle, comprehensive coverage is often mandatory. However, it’s optional if you own your car outright.

Is It Worth Getting Collision Coverage for an Older Vehicle?

Insurance premiums for newer vehicles can be high. You may be thinking: "Sinxe I have an older vehicle, I should not have collision and comprehensive insurance, right?"

Your vehicle's age that doesn’t mean you should automatically skip collision coverage.

Here are some questions to consider when deciding if collision coverage is right for you:

• Can you afford to replace your vehicle if it’s totalled?
• Can you cover the cost of collision repairs out of pocket?
• Do you have drivers who are inexperienced or have a questionable driving record?
• Are you okay with taking the risk of a major expense if you're found at fault for a collision?

Optional auto insurance is a very personal decision. For some, collision coverage might not be worth the cost, especially if:

• The premium is 10% or more of your car’s value.
• You’re looking to save money in the short term on your car insurance policy.
• You’re an experienced driver with other low-risk drivers using your vehicle.
• You simply cannot afford the increased premium.

Assessing these factors can help you determine if collision coverage is a practical investment for your situation or if it’s more beneficial to forgo it.

Conclusion

Collision insurance provides crucial coverage for repair or replacement costs.

Collision and comprehensive coverage are beneficial if your vehicle is damaged in an accident or due to environmental factors, regardless of fault. This coverage is mandatory for financed or leased vehicles, but optional for those who own their cars outright.

On the other hand, remember that comprehensive insurance covers non-collision-related damage such as weather impacts, theft, and vandalism.

Deciding whether to invest in collision coverage, especially for an older vehicle, depends on your financial situation and the potential costs of replacing or repairing your car.

If you’ve recently been in an accident or have questions about your insurance, contact Cerna Collision. We handle ICBC claims for you during stressful times and are here to help with any insurance-related queries. 

Reach out to us today at 604-580-2074 or email us at claims@cernacollison.com to ensure your vehicle is in good hands.