Do you need collision insurance?

Listen up, commuters and slumlords. While collision insurance coverage is not required in Canada — unless you live in Saskatchewan or Manitoba or lease or finance your car — it is a recommended supplemental insurance if you drive long distances between home and work (or between home and cottage), often major highways or just wanting the comfort of knowing that your car is covered should you ever be involved in a collision.

When deciding whether you need this type of coverage, consider the value of your vehicle and the amount of your collision deductible. Think of it this way: If you’re driving a brand-new vehicle that cost you $20,000, you’d probably feel comfortable paying a $1,000 deductible to have it replaced. However, if you’re driving an old car whose value is about the same as the deductible — and especially if you’re planning to upgrade your ride in the near future — it probably isn’t in your best interest to pay extra for a collision.

“Sometimes, if you have an older vehicle that doesn’t hold much value anymore, you may be able to save some money on your insurance premiums by eliminating comprehensive and collision coverage,” says Karageorgos.

What happens if you don’t have accident insurance?

If you’re at fault in an accident and don’t have accident insurance, you’ll have to pay out of pocket for any damage to your vehicle, Karageorgos says. You are financially responsible for repairs, which can of course add up quickly. However, if you sign up for collision coverage, you only have to pay the deductible. Any damage to the vehicle or property of the other party is already covered by your mandatory third-party liability insurance.

Depending on the nature of the accident and who is at fault, your vehicle may be covered by other coverages. For example, if you are not at fault in the accident, damage to your vehicle should be covered by the other driver’s third-party liability coverage. If you live in a province with DCPD, you will be reimbursed directly by your insurance company (without having to deal with the other person’s healthcare provider).

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The Average Cost of Collision Insurance in Canada

Every insurer is different. So you will have to answer a number of questions and also ask some in order to understand how your premium is calculated. The cost of collision coverage depends on factors such as the make and model of your vehicle, your driving habits and where you live and work. It is generally estimated that a collision will add between 10% and 20% to the cost of your policy, depending on your insurer.

One way insurers determine the cost of your premium is through the Canadian Loss Experience Automobile Rating (CLEAR), a system based on insurance claims data collected by multiple insurance companies in Canada. With CLEAR, vehicle makes and models are assigned a range of scores based on factors such as their security features, repair costs, and risk of theft. These scores reflect the relative risk of insuring that particular vehicle, which providers use to help calculate what your premium should be. Looking up the CLEAR scores for your vehicle can give you an idea of ​​how it ranks compared to other vehicles, Karageorgos says, and how that’s going to affect the cost of collision insurance.

How can you make collision insurance cheaper?

There are few ways to do this. “The most immediate and fundamental is your driving record,” Karageorgos says. If you are the only person driving the vehicle, having a clean driving record, no tickets, and no previous claims can help lower your premium. Where you live also plays a role. For example, if you live in a densely populated area with more cars on the road and higher speed limits, the cost of collision insurance can rise.

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