Comprehensive vs Collision Insurance: Making the Right Coverage Decision in Canada

By Arthur Dubois | Published on 15 Aug 2023

    When it comes to insuring your vehicle in Canada, two terms you’ll frequently encounter are comprehensive and collision insurance. Comprehensive insurance covers unexpected incidents unrelated to collisions, such as theft, vandalism, and natural calamities. Collision insurance, on the other hand, covers damages specifically resulting from an accident. As a Canadian driver, understanding the differences between these two coverages is essential to tailoring a car insurance policy that best suits your needs.

    What are the main differences between comprehensive and collision insurance in Canada?

    Comprehensive and collision insurances are two distinct coverage options available to Canadian drivers. Each offers protection against different types of potential risks. 

    As the name suggests, comprehensive insurance provides a broader scope of coverage. It protects against non-collision-related events such as theft, vandalism, fire, natural disasters, falling objects, and damage caused by animals. For instance, if a tree branch fell on your car during a storm or someone stole your vehicle from a parking lot, comprehensive insurance would cover the repair or replacement costs.

    On the other hand, collision insurance specifically addresses damages to your vehicle that result from a collision, regardless of who is at fault. Collision damages include accidents with another car or a stationary object, like a lamppost or a tree. For example, if you accidentally back into a concrete pillar in a parking lot or collide with another vehicle on the road, your collision insurance would cover the damages incurred. 

    Suppose the other driver is at fault in an accident, and they have liability insurance. In that case, their insurance might cover the damages to your car. However, if they are uninsured or underinsured, having collision coverage can be invaluable.

    Policy characteristicsComprehensive InsuranceCollision Insurance
    Commonly Covered EventsTheft VandalismFireNatural disastersDamage from animalsFalling objectsHitting another vehicle Crashing into a stationary objectDamage from hitting the ground, such as a rollover
    At-Fault ConsiderationNot typically based on fault Can be influenced by who’s at fault 
    Best forCars with lower valueNewer carsLeased or financed vehiclesHigh-value vehicles

    What is Comprehensive Insurance?

    As the name suggests, comprehensive insurance offers a broad range of protection for your vehicle. It goes beyond the coverage provided by basic liability insurance and typically covers losses resulting from:

    • Theft
    • Vandalism,
    • Hitting a wild or domestic animal, such as a deer or dog
    • Explosions
    • Fire
    • Earthquake
    • Flying objects
    • Falling objects
    • Riots and civil disturbances
    • Weather-related damage, such as lightning or hail

    When protecting your vehicle from unexpected events, comprehensive insurance is a valuable addition to your insurance policy. It provides you with peace of mind in various situations.

    Imagine you wake up one morning to find your car has been stolen. Comprehensive insurance lets you replace your vehicle entirely without paying out of pocket. However, with comprehensive insurance, you can file a claim and receive compensation for the cash value of your stolen car.

    But comprehensive insurance doesn’t stop at theft coverage. It also protects against other unfortunate incidents that can damage your vehicle. 

    Additionally, comprehensive insurance may also provide coverage for windshield damage. A small crack on your windshield may seem insignificant. Still, it can quickly escalate into a significant problem if you don’t fix it. Comprehensive insurance typically covers the cost of repairing or replacing your windshield.

    Furthermore, comprehensive insurance covers damage caused by riots or civil disturbances. In times of social unrest, it’s not uncommon for vehicles to become collateral damage. Whether it’s a broken window or dented bodywork, comprehensive insurance ensures you won’t have to bear the financial burden of repairing your vehicle.

    Another peril that comprehensive insurance protects against is damage from floods and rising water. Natural disasters can wreak havoc on your vehicle, leaving it with water damage or a pockmarked exterior. With comprehensive insurance, you can rest easy knowing you have coverage for repairing or replacing your car due to these natural disasters.

    Pros and Cons of Comprehensive Insurance

    One significant advantage of comprehensive insurance is that it covers many risks. Additionally, this type of coverage is often cheaper than collision insurance, making it an attractive choice for budget-conscious individuals. 

    Collision insurance covers damages resulting from accidents with other vehicles or stationary objects. Comprehensive insurance covers a broader range of risks, typically at a lower cost.

    However, comprehensive insurance does have some limitations. First, it doesn’t cover damages from collisions with other vehicles or stationary objects. If a collision damages your car, you’ll have to rely on collision insurance or pay for the repairs out of pocket.

    Second, comprehensive insurance usually carries a deductible. A deductible is the amount you must pay out of pocket before the insurance coverage kicks in. The deductible can range from a few hundred dollars to several thousand and affects the overall cost of your insurance premiums.

    Despite these limitations, comprehensive insurance remains valuable to any insurance policy. It offers extensive coverage, protecting you from risks that can cause significant financial burdens.

    What is Collision Insurance?

    Collision insurance is auto insurance coverage that provides financial protection in a collision with another vehicle or a stationary object, such as a tree or a fence. The purpose of collision insurance is to cover the costs of repairing or replacing your car if you damage it in an accident.

    Coverage Provided by Collision Insurance

    Collision insurance protects you against the financial burden of repairing your vehicle after a collision. This coverage is essential if your car is relatively new or has a higher market value.

    Suppose you’re driving on a busy road, and another vehicle swerves into your lane, causing a collision. The impact is significant, and both vehicles sustain damage. Thanks to collision insurance, the costs of repairing your car will be covered. Whether it’s a minor fender bender or a more severe accident, collision insurance has your back.

    Pros and Cons of Collision Insurance

    Like any insurance coverage, collision insurance has its advantages and disadvantages. Understanding these pros and cons can help you make an informed decision when choosing the right insurance for your vehicle.

    The primary benefit of collision insurance is it protects your car in the event of an accident, regardless of who is at fault. Collision insurance can provide you with significant peace of mind, especially if you rely heavily on your vehicle for transportation. Knowing you won’t have to bear the financial burden of repairing or replacing your car can be a huge relief.

    However, collision insurance tends to be more expensive than comprehensive insurance due to the increased risk it covers. Part of the higher cost is because collisions commonly cause vehicle damage, and repairs can be costly. 

    Additionally, like comprehensive insurance, collision insurance usually involves a deductible that is a factor in the overall cost of the coverage.

    Making the Right Coverage Decision

    When deciding whether to opt for comprehensive insurance, collision insurance, or both, several factors should be considered. These include the value of your vehicle, driving habits, budget, and risk level you’re willing to assume.

    Suppose your car has a lower market value or is an older model. In that case, comprehensive insurance may provide the necessary protection without breaking the bank. However, you may want to consider collision insurance to mitigate potential repair costs if you have a newer or more valuable vehicle.

    Review your driving habits and the risks you may encounter on the road. If you frequently drive in areas with a high risk of theft or vandalism, comprehensive insurance becomes even more essential.

    Understanding Your Car Insurance Needs

    Ultimately, the decision regarding comprehensive vs. collision insurance depends on your circumstances and risk appetite. Consulting with an insurance professional can provide valuable insights tailored to your specific needs and help you make an informed decision.

    Remember, the goal is to have a coverage plan that offers adequate protection for your vehicle and gives you peace of mind. By understanding the nuances of comprehensive and collision insurance, you can navigate the complex world of insurance coverage in Canada and make an informed choice.

    FAQs About Comprehensive & Collision Insurance in Canada

    What is the difference between collision and comprehensive auto insurance?

    In Canada, collision and comprehensive auto insurance serve distinct purposes. Collision insurance covers damages to your vehicle resulting from an accident with another car or object, regardless of who is at fault. On the other hand, comprehensive insurance provides coverage for damages unrelated to collisions, such as theft, vandalism, or natural events like storms and fires.

    Can you have collision coverage without comprehensive car insurance in Canada?

    Yes, you can certainly opt for collision coverage without adding comprehensive coverage to your car insurance policy in Canada. They are separate coverages and are not dependent on each other.

    Do I need both collision and comprehensive coverage?

    Whether you need both depends on your specific needs, the value of your vehicle, and your risk tolerance. While some drivers choose both for maximum protection, others may select only one based on their situation.

    Does comprehensive insurance cover collisions?

    No, comprehensive insurance does not cover collisions. Collisions are specifically covered under collision insurance. Conversely, comprehensive insurance covers damages from non-collision-related events such as theft, vandalism, or natural occurrences.

    Is a cracked windshield covered by comprehensive or collision insurance?

    A cracked windshield is generally covered under comprehensive insurance unless it’s the result of a collision. If the damage occurs due to an accident with another vehicle or object, it would be covered under collision insurance.

    Is a hit-and-run accident a comprehensive or a collision claim?

    A hit and run, where another driver hits your vehicle and leaves the scene, is typically treated as a collision claim in Canada.

    Is vandalism covered by comprehensive or collision insurance?

    Vandalism is covered under comprehensive insurance. It protects damages to your vehicle from events other than collisions, such as theft or malicious damage.

    How much comprehensive and collision coverage do I need?

    The appropriate limit for your comprehensive and collision insurance should typically correlate with the cash value of your vehicle. It’s common for individuals to choose coverage limits close to the replacement cost of their car. If you’ve financed or leased your vehicle, the lender or lessor may also set minimum required coverage amounts. Additionally, consider the age of your car, its depreciation rate, and your comfort level with potential out-of-pocket costs in case of an accident. Premiums will cost more for higher coverage amounts, so balancing your need for security against the insurance cost is essential. 

    Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications