What Is Collision Coverage?
Collision coverage helps protect your vehicle as an asset when it is damaged in a collision, including many accidents involving another vehicle, an object, the ground, or a hit-and-run situation.
This page is educational. Your actual coverage depends on your policy wording, deductible, endorsements, insurer rules, claim facts, and underwriting eligibility.
What collision coverage does
Collision coverage is optional physical damage coverage for your own vehicle. It is designed to help pay for covered damage when your vehicle is involved in a collision with another object or tips over.
In simple terms, collision coverage helps protect the vehicle itself. If your car is damaged in a covered collision, this is the section of the policy that may help pay to repair or replace your vehicle, subject to your deductible, policy limits, exclusions, and claim details.
It protects your vehicle as an asset
Your car may be one of the most expensive things you own. Collision coverage helps protect that asset when it is damaged in a covered collision.
It is separate from liability coverage
Collision coverage is not what pays for damage you cause to someone else’s property. Liability coverage is the section that may respond to legitimate claims made against you.
- Hitting another vehicle may fall under collision coverage for damage to your own vehicle.
- Hitting a pole, guardrail, curb, wall, fence, or another object may fall under collision coverage.
- A single-vehicle accident, including sliding on ice and hitting something, may involve collision coverage.
- A hit-and-run involving damage to your vehicle may require collision coverage or all perils coverage, depending on the policy and claim facts.
How the collision deductible works
A deductible is the amount you agree to pay toward a covered collision claim before the insurer pays the remaining covered amount.
For example, if your vehicle has a covered collision claim and your deductible is $1,000, you are responsible for the deductible amount. The insurer then handles the covered amount above that deductible, subject to the policy terms.
Estimated covered damage to your vehicle.
The amount you pay first on the covered claim.
Example amount after the deductible, subject to policy terms.
Higher deductible vs. lower deductible
A higher deductible may lower your premium, but it also means you pay more out of pocket if you make a covered collision claim. A lower deductible may cost more, but it can reduce the amount you pay at claim time.What happens if you do not have collision coverage?
Removing collision can reduce premium, but it also changes who pays for damage to your own vehicle in certain situations.
You may pay for your own repairs
If you cause an accident, hit an object, slide into something, or damage your vehicle in a single-vehicle collision, you may have no coverage for your own vehicle repairs without collision.
You still may have liability coverage
Removing collision does not automatically remove liability coverage. Liability coverage is what may protect you when someone else is injured or their property is damaged.
Your car is the exposed asset
Without collision, the main risk is damage to your own vehicle. If the car is worth repairing or replacing, this risk should be reviewed carefully.
Collision coverage is not about whether you are a good driver. It is about whether you want coverage for your own vehicle when certain physical damage losses happen.
Parking lot hit-and-run: why collision matters
One of the most misunderstood collision situations is when your parked vehicle is hit and the other driver leaves without being identified.
If the other driver leaves, you may need collision coverage
If your vehicle is hit in a parking lot and the other driver cannot be identified, you may be without coverage for the damage to your own vehicle if you do not carry collision or all perils coverage. This can be true even if you were not at fault.If the other driver is known
If the other driver is identified and insured, damage to your vehicle may fall under Direct Compensation Property Damage, depending on the province, policy, fault determination, and whether the required conditions are met.
If the other driver is unknown
If the driver leaves and cannot be identified, the usual Direct Compensation Property Damage conditions may not be met. In that situation, collision or all perils coverage may be what protects your vehicle.
What to do after a parking lot hit-and-run
Take photos, look for witnesses or camera footage, report the incident as required, and contact your broker or insurer as soon as possible. Ask how your deductible applies and whether your policy includes the coverage needed for vehicle damage.Leased or financed vehicles: check before removing collision
If your vehicle is leased or financed, do not remove collision coverage without checking your agreement and speaking with your lender, lessor, or financing company.
Many lease and finance agreements require physical damage coverage because the lender or leasing company has a financial interest in the vehicle. They may require collision, comprehensive, all perils, specific deductibles, and proof that they are properly listed on the policy.
- Review your lease or finance agreement before removing collision coverage.
- Ask the lender or lessor whether collision and comprehensive coverage are required.
- Confirm the maximum deductible they allow on the policy.
- Make sure the lender, lienholder, or leasing company is listed correctly if required.
- Get permission before making a coverage change that could violate your agreement.
Important
Even if collision coverage is optional from an insurance law perspective, it may still be required by your lease or finance contract. Removing it without permission could create problems with your lender or lessor.Should you keep collision coverage?
There is no one-size-fits-all answer. The right decision depends on your vehicle value, deductible, premium savings, loan or lease requirements, and whether you could afford repairs or replacement.
Consider keeping it if...
Your vehicle is newer, valuable, leased, financed, used daily, parked in busy lots, or expensive for you to repair or replace out of pocket.
Review removing it if...
You own the vehicle outright, it has a lower market value, the premium savings are meaningful, and you are comfortable self-insuring the risk.
Ask before changing it
Before removing collision, ask what would happen after an at-fault collision, single-vehicle accident, or parking lot hit-and-run.
The key question is simple: if your car were damaged tomorrow, would you want insurance involved, or would you be comfortable paying for the vehicle yourself?
Continue learning about auto insurance
Comprehensive Coverage
Learn how comprehensive coverage is different from collision and what types of non-collision losses it may help protect against.
Collision vs. Comprehensive
Compare these two coverages side by side so you can understand what each one is generally designed to do.
Liability Coverage
Learn how liability coverage works and why it is separate from collision coverage for your own vehicle.
Collision coverage FAQs
Is collision coverage mandatory in Ontario?
Collision coverage is optional auto insurance coverage. However, if your vehicle is leased or financed, your lender or leasing company may require it as part of your agreement.
Does collision coverage protect my car if I hit something?
Collision coverage may help pay for covered damage to your own vehicle if you hit another vehicle, a pole, a guardrail, a wall, the ground, or another object, subject to your deductible and policy terms.
What happens if my parked car is hit and the driver leaves?
If the other driver cannot be identified, you may need collision or all perils coverage for damage to your own vehicle. Without it, you may have to pay for the repairs yourself, even if you were not at fault.
Does collision coverage pay for damage I cause to someone else’s car?
No. Collision coverage is for covered damage to your own vehicle. Damage or injury claims made by others are generally handled under liability coverage or other applicable sections of the auto policy.
Can I remove collision coverage from a financed vehicle?
You should check with your lender or lienholder first. Many financed vehicles require physical damage coverage, and removing collision without permission may violate the finance agreement.
