What types of damage does car insurance cover?

Repairs covered by car insurance

Car insurance in Canada provides broad coverage — at least, it can. It’s divided into several different coverages, some of which are optional. Those optional coverages happen to be the ones that cover most forms of damage to your car.

So, the repairs that car insurance will pay for depend on which optional coverages your policy includes. You’ll need to have had these coverages on your policy at the time of the accident to make a claim under them.

Direct Compensation for Property Damage (DCPD)

DCPD coverage (in Ontario, Alberta, and some other provinces) or the Direct Compensation Agreement (in Quebec) covers damage to your car stemming from a collision with another vehicle. But: only when another driver is at fault for the damage. If someone else is responsible for collision damage to your car, DCPD will cover the repairs.

DCPD coverage is usually mandatory. In some provinces, drivers may opt out of it.

Collision coverage

Collision coverage covers repairs for damage arising from collisions with other vehicles, animals, objects, or the ground. Unlike DCPD, collision applies when you (or someone driving your car with your permission) are at fault for the collision. If more than one driver shares in the fault, collision coverage would only pay for repairs proportionally. (Like 50% of the repair costs if you’re 50% at fault.) There’s also usually a deductible to pay before your policy pays the rest of the repair costs.

Collision coverage is optional. However, it’s required for leased or financed vehicles.

Comprehensive coverage

If you have comprehensive coverage, your car insurance pays for repairs deriving from events that aren’t collisions, like weather damage or vandalism. If you have this coverage, your policy will feature a list of covered perils. Like other coverages, you may have to pay a deductible before your insurance pays the remaining repair costs. While it’s not a form of damage per se, comprehensive coverage also covers theft of the vehicle.

Like collision, comprehensive coverage is optional unless you’re leasing or financing your vehicle.

Similar to comprehensive coverage is specified perils coverage. It’s basically the same but with a shorter list of covered perils.

All perils coverage

All perils coverage is the best damage coverage you can get for your car. It’s a combination of collision and comprehensive coverage. In some provinces, it also adds additional theft coverage. All perils is optional.

Full coverage car insurance

You might see full coverage while shopping for car insurance. “Full coverage” isn’t an official term, so it may mean different things to different providers. Many don’t even use the term. Usually, full coverage includes all the key types of car insurance coverage: liability, comprehensive, and collision. Some providers add extra features like rental car coverage, too.

Repairs not covered by car insurance

If you’ve purchased optional coverages like collision and comprehensive, your car insurance policy will cover many repairs. Most damage caused by a sudden, unexpected event falls under one insurance coverage or another. But insurance isn’t unlimited — car insurance, even comprehensive insurance, won’t pay to repair mechanical breakdowns or manufacturer defects.

There are other ways to cover such repairs, however:

Manufacturer warranty

When you buy a new vehicle, it’s under warranty for several years, or until it hits a certain number of kilometres driven — whichever comes first. Commonly, warranties last three years or 60,000 kilometres.¹

Manufacturer warranties cover most mechanical issues that crop up during the warranty period. However, for the warranty to be valid, you’ll have to ensure that the vehicle gets its routine maintenance: oil changes, regular checkups, and so on.

Car repair insurance or extended warranty

To fill in gaps in the manufacturer warranty, or to continue coverage after the warranty ends, some drivers buy car repair insurance. It’s also known as mechanical breakdown insurance, and is very similar to an extended warranty.

Car repair insurance covers repair costs for issues that arise from regular use of the vehicle but don’t fall under the manufacturer warranty. For example, breakdowns that happen because of regular wear and tear. It does not cover most routine maintenance, like brake pad replacements or oil changes.

Car repair insurance is different from standard car insurance. It covers totally different things, and it’s optional, whereas regular car insurance is required by law. Many insurance providers offer repair insurance, but it’s a separate product from the mandatory car insurance policy. Repair insurance is also not regulated as strictly as car insurance — be aware that policies can vary a lot between providers.

You can also buy an extended warranty from a manufacturer or dealership that offers many similar benefits to car repair insurance.

Commonly asked questions

Does car insurance cover paint damage?

Your car insurance policy will pay to repair any physical damage to your vehicle — including paint — provided the damage arises from an event your policy covers. For example, if you find someone’s scratched your paint with their keys, it would be vandalism. Vandalism is covered by comprehensive coverage.

Does car insurance cover natural disasters?

Comprehensive car insurance covers damage arising from a wide range of natural disasters, including hail, wind, heavy rainfall, and more.

Comprehensive is optional, unless your vehicle is leased or financed. In order to have coverage for a natural disaster, you’d need to have it on your policy when the disaster occurred.

Sources

1. Carver, Alex. “Factory Warranty Overview.” MarketWatch Guides, 5 Aug. 2024, www.marketwatch.com/guides/car-warranty/factory-warranty.

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