If you’ve recently purchased a vehicle, or you’re looking to switch your car insurance provider, you may be wondering what type of insurance coverage you need. Two core types of auto insurance offerings are collision and comprehensive coverage. But what do these optional coverages mean?
While collision coverage may sound self explanatory, there may be slight nuances you may not be aware of. In this article we compare the two different types of coverage options to help ensure you’re making an informed decision.
Is Collision Coverage Mandatory?
What Happens If I Don’t Have Collision Coverage For My Vehicle?
When Should I Consider Collision Insurance?
What If I’m Driving A Rental Car, Do I Need Collision Insurance As Well?
What Is A Deductible And Which Option Should I Choose For My Comprehensive Coverage?
What To Do If I’m Involved In A Collision?
What Is Comprehensive Coverage?
Is Comprehensive Coverage The Same As Full Coverage?
Is Comprehensive Coverage Mandatory?
If I’m Leasing Or Financing A Car, Do I Need Comprehensive Coverage?
Benefits Of Having Comprehensive Coverage
How Does Comprehensive Coverage Differ From Collison Coverage?
Let’s start with collision coverage.
What is Collision Coverage?
Collision coverage can help pay to repair or replace damage when the insured’s vehicle is involved in a collision with another object.
Is Collision Coverage Mandatory?
While a practical coverage option to have for your vehicle, collision coverage is not mandatory. In Canada the following coverage is mandatory:
Liability Insurance Coverage
Protects you if you are in an accident and you are held liable for the injury to, or death of, other people. It also covers damage to their vehicle or property.
Accident Benefits
Covers medical bills, rehabilitation, funeral costs, and loss of income due to disability (not applicable in Quebec) from a vehicle collision.
What Happens if I Don’t Have Collision Coverage for my Vehicle?
If you’re found to be at-fault in a collision, and don’t have the appropriate coverage, you may have to pay out-of-pocket to repair or replace your vehicle.
If you have Direct Compensation for Property Damage coverage, it will cover damage to your vehicle following an accident that isn’t your fault.
When Should I Consider Collision Insurance?
When looking into collision coverage for your vehicle it’s important to consider:
- Driving Habits – Are you someone who drives their vehicle often?
- Travel Distance – Are you someone who travels long distances? (However noting that in the U.S., 77% of motor vehicle crashes happen within 16 KM of a person’s home).
- Driving Record – Do you have a history being involved in a collision? This may also determine the rates you’ll pay for the additional coverage.
- Access to Your Vehicle – Are you the only one driving your vehicle or will there be others in the household with access to it?
While collision coverage is not mandatory, we highly recommend adding the coverage. Your liability coverage will only provide protection for you if you are in an accident, and you are held liable for the injury to or death of other people. While the liability coverage will help pay for any damages incurred by the victim, this will not provide you with the coverage you need to repair your vehicle.
What If I’m Driving a Rental Car, Do I Need Collision Insurance as Well?
If you’re going on a trip and you’re renting a vehicle, you’ll have two options – purchasing the insurance provided by the rental company or adding rental vehicle coverage (also known as endorsement 27) from your existing provider.
If you choose the latter option, you will need to speak with your insurance provider to add an endorsement to extend your coverage to include other vehicles that you don’t own.
What is a Deductible and Which Option Should I Choose?
Your deductible is the portion of the claim you pay. For example, if you have an accident which causes $2,000 in damage to your car and you have a $500 deductible, you will pay the first $500 and your insurer would pay the remaining $1,500.
Choosing a higher comprehensive deductible (options typically include $500, $1,000, $1,500) generally means your insurance premiums may be lower.
What to Do If I’m Involved in a Collision?
If you’re involved in a collision, be sure to:
- Check to see if anyone is injured.
- Get to safety.
- Contact the police to report the incident.
- Assess the damage.
- Exchange insurance information with the other party.
- Contact your insurance company to file a claim.
- Follow the instructions from your insurance provider.
But what about comprehensive car insurance
What is Comprehensive Coverage?
Comprehensive auto coverage is for incidents that don’t involve a collision (typically associated with damage by unexpected situations). You may hear some of these instances being referred to as “perils.”
Perils are typically defined as dangers such as:
- Theft (or attempted theft)
- Extreme weather conditions (such as windstorms or hail); and
- Other damage to your car (such as vandalism or impact with an animal).
Is Comprehensive Coverage the Same as Full Coverage?
The short answer is no. When you hear the term “full coverage”, that typically involves the mandatory coverage options for the province you live in plus comprehensive and collision coverage. Comprehensive coverage is for incidents that don’t involve a collision.
Therefore, it’s important to understand what is covered under your policy.
Is Comprehensive Coverage Mandatory?
Like collision coverage, comprehensive coverage is not mandatory. However, the assessment for determining whether you need comprehensive coverage is the same for collision coverage.
If I’m Leasing or Financing a Car, do I Need Comprehensive Coverage?
If you’re financing or leasing your car, your lender likely requires comprehensive coverage. If you own your car outright, it can be an option on your car insurance policy.
Benefits of Having Comprehensive Coverage
It’s important to consider the risk if you don’t have this type of coverage. For example, auto theft continues to be a major issue across the country; and while we have plenty of tips to help prevent your car from being stolen, if your vehicle (or the contents within it) are stolen, comprehensive coverage can help cover the cost of repairs or replace your vehicle.
How Does Comprehensive Coverage Differ From Collison Coverage?
Comprehensive coverage does not provide you with protection if you’re involved in a collision. The same way collision coverage does not provide you with protection if your vehicle was damaged by many incidents that don’t involve a collision (like vandalism, theft, or weather-related damages).
That’s why it’s important to understand your coverage options and decide what coverage is right for you.
To learn more about the different types of automobile coverage, be sure to speak with a local agent.
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