Collision Insurance

What is collision coverage?

Collision coverage is part of the standard insurance coverage provided for automobiles and other conveyances when there is a risk of an accident involving another mode of transportation or when the insured vehicle strikes a stationary object. Collision coverage is intended to provide resources to repair the insured conveyance but does not cover medical and other expenses related to drivers and occupants of the vehicle. Generally, collision coverage provides limited protection, minus any deductible specified by the policy.

Collision insurance was once considered optional coverage for auto insurance policies. However, since the latter part of the 20th century, more and more jurisdictions have required people to carry comprehensive auto insurance, including a collision coverage component. In some cases, the vehicle owner cannot renew the tag without presenting proof of insurance coverage at least equal to the minimum requirements set by the jurisdiction. If the driver is caught driving the vehicle without carrying the minimum amount of insurance, they may be fined or lose their driving privileges for some time.

Collision coverage helps protect the insured in the event of an accident. This type of coverage focuses on the repair of the insured vehicle. This means that collision coverage does not provide any type of compensation for damage to property or any other vehicle involved in the accident. However, collision coverage will provide the resources needed to repair the insured vehicle, regardless of who caused the accident.

Depending on the insurance company and the amount of coverage desired, collision coverage may have a small or large deductible. Generally, people who drive older vehicles with a reduced Blue Book value can opt for higher deductibles, as there is a higher chance of an older vehicle being declared totaled by the insurance company. Newer vehicles generally have lower deductibles, as there is a greater chance that the vehicle will be repaired by the insurance provider.

In recent years, car dealerships and financial institutions that provide car loans have tended to require the owner to obtain and maintain comprehensive auto protection for as long as the loan remains outstanding. In some cases, the bank or finance company may require the owner to present documentation proving that the vehicle is fully insured, including an element of collision coverage, before allowing the consumer to take possession of the automobile.

Do I need a Collision Damage Waiver for my vehicle?

What is Collision Protection?

Collision protection is a type of coverage included in your insurance policy. Suppose your car was damaged by hitting another vehicle or an object ( underground parking wall, garage door, traffic sign, etc. ). If you opted for collision protection, your insurance will pay the cost of repairing or replacing your vehicle 

The exact benefits vary from province to province, but the overall benefit is that you don’t have to pay out-of-pocket expenses 2 other than the deductible and possibly a rental car.

Deductible: what you have to pay first before TD Insurance pays the rest. The deductible ranges from $500 to over $5,000. Your TDA advisor helps you determine the correct deductible amount when you take out your policy.

So when should you choose collision protection?

If you lease or finance your vehicle, collision protection is mandatory. However, if you own it, you have the option to remove this protection.

To determine whether or not you should choose the collision option, consider these three factors:

  1. Vehicle value
  2. Deductible amount
  3. Personal financial situation (i.e. the potential impact on your finances of the removal of collision protection, which would require you to pay out of pocket for the repair or replacement of the vehicle)

Things to consider:

  • The maximum amount TD Insurance would pay if you had an at-fault accident resulting in your vehicle being declared a total loss.
    • Without collision protection, you should then assess your financial situation. Would you be able to save enough during the year to cover the cost of a replacement vehicle (or major repairs, if the damage is repairable)?

The cost of collision protection compared to the value of your car and the amount of the deductible chosen.

How is collision protection different from non-collision or upset accident protection?

What would happen if your car suffered non-collision damage? This is where collision-free, upset-free protection comes in.

This is another type of insurance. It covers damage to your car that is not caused by a collision. Collision-Free Upset Protection covers your vehicle against the following:

  • Environmental damage – flood, fire, wind, and hail
  • Damage caused by falling trees or objects
  • Collisions with animals, for example, a deer
  • Theft and vandalism
  • explosions

Similar to collision coverage, if you lease or finance your vehicle, no-collision-no-upset coverage is mandatory. However, if you own it, you have the option to remove this protection. Before deciding whether or not the no-collision, the no-upset option will be advantageous, consider all the costs you would have to absorb (overall amount, deductible, replacement cost, etc.) and the impact on your finances.

Since an aging car is worthless…will insurance be cheaper?

Just because your car is already a certain age does not mean that the insurance premium will automatically be reduced. Remember that the cost of car insurance depends on several factors, including the following:

  • Vehicle type
  • Model flight rate
  • Insurance coverage was taken out (for example, the amount of the deductible)
  • Driving experience ( novice driver, as opposed to an experienced driver with a good driving record)
  • Place of residence

Once all these factors are taken into account, the age of the vehicle has very little effect on the overall price of auto insurance.

By aamritri

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