How collision insurance works in Canada

If you own your car outright, and aren’t leasing or financing it, collision insurance is optional and not mandatory. However, you still need to assess your financial situation. The big question will be, "Can you afford to replace your car if you're in an accident?"

Collision protects your car for damage caused by at-fault accidents/single motor vehicle accidents and hit and runs. Comprehensive covers your car when it's parked, protecting it from risks such as theft, vandalism, or a falling tree. Both of them are optional coverages that can be added to any car insurance policy in Canada.

The minimum requirement is $500, but some carriers may require more. When selecting your collision insurance deductible, we recommend at least getting a $1,000 deductible. If you're able to take on a higher deductible you can save even more on your insurance.

Yes - collision coverage is needed to protect your vehicle from being hit, even if it’s parked for the short- or long-term, while comprehensive car insurance coverage provides additional protection against incidents such as fire, theft, or vandalism while parked. It’s a smart idea to keep your vehicle under both collision and comprehensive policies, even if it’s not currently in use, to protect it while it’s parked.

Depending on your insurer, they may offer an option for accident forgiveness. If you’re in an at-fault accident and you have accident forgiveness, your insurer won’t increase your premiums for one accident. If you have a history of accidents, you may not qualify for this add-on to your policy. Accident forgiveness may come standard on a policy, be sure to ask about it when you’re speaking with your car insurance broker.

A higher deductible means you'll pay less for insurance annually, but you'll have to fork over that higher amount if you file a collision insurance claim. If you can afford the higher deductible, go for it.