Collision Coverage: What It Covers & When It’s Worth It
What is collision coverage?
Collision coverage is an optional type of car insurance that pays to repair or replace your own vehicle after a crash with another vehicle or object, regardless of fault, minus your deductible. Collision coverage can be used for most motor vehicle crashes, including hitting a pothole or a single-car rollover event.
On your way to work, you hit a guardrail on the highway, damaging your front bumper and the side body of your car. A body shop estimates that the damage will cost a total of $6,100 to repair.
- If you didn’t have collision coverage, you’d have to pay the full $6,100 out of pocket unless you can show that another driver caused the collision (e.g., you needed to swerve to avoid an unsafe driver). If you’re at fault or no other driver was involved, you’ll have no coverage for the damage.
- If you had collision coverage, your insurance company would pay the full cost of repairs, minus the collision deductible you selected when you purchased the policy. If your deductible is $1,000, you’d receive a total payout of $5,100.
How collision insurance works
Collision insurance pays for damage to your insured vehicle(s) caused by a collision with a vehicle, the ground, or a stationary object. The coverage applies regardless of fault.
Examples of things covered by collision coverage include:
- Any collision with one or more other vehicles
- A hit-and-run accident
- A single-car rollover
- Hitting a pothole or other road obstruction
- Hitting a guardrail, telephone pole, sign, or building
Collision insurance coverage covers up to the actual cash value of your car at the time of the incident and is subject to your car insurance deductible, which reduces the overall payout by a set dollar amount.
To use your collision insurance, you must file an insurance claim. Here’s what to expect:
- First, you report the collision to your insurance company. Provide as much detail as possible, including a police report and photos of the damage.
- Next, a claims adjuster will assess the damage and compare the projected cost to repair your vehicle with the car’s actual cash value (ACV), which is the maximum your policy can pay out.
- If the repair cost exceeds or approaches ACV, the adjuster may declare your vehicle a total loss and issue a cash settlement.
- If repairs cost less than your car’s ACV, you’ll authorize repairs to your vehicle and pay your deductible.
- Your insurance company may pay your repair contractor directly or send you a reimbursement cheque for the full cost of repairs minus your deductible.
What collision coverage doesn’t cover
Collision coverage won't pay for damage from theft, vandalism, fire, weather, or animals. It also won’t pay for your medical bills or for other people's property or injuries.
Collision coverage won’t pay for damage to other people’s property that you’re responsible for, or medical costs for anyone involved in an accident. For that coverage, all drivers in Ontario must carry third-party liability and statutory accident benefits.
All car insurance policies in Ontario include direct compensation property damage (DCPD) coverage by default, which covers damage to your car if another driver is fully or partially at fault. If you’re in a crash with an at-fault driver, your DCPD insurance might cover the full cost of repairs. If you’re deemed to be partially at fault, you can use your collision coverage to cover the remainder of your vehicle repairs not covered by DCPD.
Collision coverage also won’t pay out if:
- You hit an animal: Collisions with animals such as deer are generally covered by comprehensive insurance instead.
- An object falls on your vehicle: Falling objects are also covered by comprehensive coverage, not collision.
- Thieves steal your car and crash it: Any collision damage caused by thieves falls under the heading of comprehensive insurance, which also covers damage related to vandalism.
Collision coverage vs. liability coverage
Collision coverage is optional coverage that pays to repair damage to your vehicle. Third-party liability coverage is mandatory coverage that pays for other parties’ property damage and medical bills if you’re found fully or partially at fault in a crash.
Both types of coverage are considered important for full coverage and are typically included in all standard auto insurance policies; however, only third-party liability insurance is required by law in Ontario.
Collision coverage vs. comprehensive coverage
Collision and comprehensive coverage are often mixed up, since both cover physical damage to your vehicle.
The simple distinction is that collision insurance covers crashes, while comprehensive insurance covers non-collision events. A non-exhaustive list of perils caused by comprehensive car insurance includes:
- Fire
- Theft and damage associated with theft
- Vandalism
- Falling objects
- Severe weather, including hail
- Damage caused by animals
Both collision and comprehensive are optional coverage, but they’re typically required by lenders if your car is financed or leased, and they’re often bundled together for what’s often referred to as a full-coverage car insurance policy. If you want more robust coverage, you can select all-perils coverage, which combines the benefits of collision and comprehensive insurance with a single shared deductible.
Insurance advisors always recommend carrying both collision and comprehensive insurance if you regularly operate a vehicle. Both types of coverage include essential financial protection if your car is damaged, stolen, or destroyed.
All-perils coverage is a simple and cost-effective way to combine collision and comprehensive coverage in your auto insurance policy.
Is collision coverage mandatory in Canada?
No, collision coverage isn’t mandatory in most parts of Canada. It’s not required by Ontario law and is fully optional unless mandated by a lender in your loan or lease contract.
Manitoba and Saskatchewan are two of the four provinces in Canada that provide all car owners with public auto insurance coverage. They’re also the only two provinces that mandate collision coverage (or something like it) as a base requirement of all car insurance policies.
- Manitoba: Manitoba’s Autopac public car insurance includes basic all perils coverage, which includes collision insurance, for all drivers.
- Saskatchewan: Saskatchewan Government Insurance (SGI) includes coverage for collision damage as part of the basic plate insurance every driver carries.
If you don’t live in Manitoba or Saskatchewan and don’t have an active car loan or lease that requires you to maintain physical damage coverage, you don’t legally need to carry collision coverage in Canada. That said, most drivers should carry collision coverage anyway.
When is collision coverage worth it?
The reality is that collision coverage is a sound investment for most drivers simply because the potential cost of vehicle damage is so significant. According to collision repair industry analysts, the average repairable severity of collision-damaged vehicles in 2025 was over $5,500 for every type of vehicle in Canada, with electric vehicles and plug-in hybrids seeing the highest costs.
And that’s the average for repairable vehicles. In recent years, the growing complexity and value of new vehicles has led to increasing frequency of total loss claims, in which the cost to repair a collision-damaged vehicle is deemed greater than the vehicle’s actual cash value.
If you don’t have collision coverage and your vehicle is damaged in a crash, you may have the following options:
- If another driver was at fault, you could receive coverage from your own insurance company through DCPD or uninsured automobile coverage.
- If you were at fault or the collision didn’t involve another vehicle, you will not have coverage.
If you can’t afford the financial hit of a total loss claim, collision coverage may be worth it.
Bad reasons to drop collision coverage
How collision coverage affects your premium
Collision insurance could cost the average driver around $375–$600 per year. Your exact cost will depend on certain rating factors in your insurance profile, such as:
- Your vehicle’s actual cash value
- Your vehicle’s make, model, and age
- Your driving habits
- Your official driving record, including the number of years you’ve held a license
- Your location
- Your chosen deductible
A higher deductible for collision coverage will lower the cost of coverage; a low deductible will raise your premium. Experts generally recommend choosing the highest deductible you could reasonably or comfortably expect to cover in the event of a crash that damages your car.
Collision deductibles vary by insurer, but you can typically set it as low as $500 or as high as $2,000 or more. In most cases, a $500 or $1,000 deductible is the best fit, but you may want to ask a licensed insurance advisor for recommendations based on a thorough analysis of your finances and risk factors.
“In trying to reduce their premiums, people generally increase their deductibles significantly. The maximum deductible they can have in certain cases is $5,000. If your vehicle is worth $5,000 and you have a $5,000 deductible, you’re basically paying the entire value of the car out of pocket to get it repaired. So it’s important to consider the trade-offs in terms of value vs. deductible.” —Reza Aziz, RIBO-licensed insurance broker
FAQ: Collision coverage
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.