Car insurance is a Canadian driving requirement, although minimum coverage specifications vary by province. These requirements don’t suggest fitting coverage amounts for drivers. Individual insurance prerequisites are unique to their own situation. Essential minimums don’t address real-life requirements, rather they incite minimalist protection. This creates an environment where the chances of monetary loss is heightened for every driver.
Just what flavor of insurance should you have, and how much will you need? We’ll delve into these issues, and discover the associated issues that you should be aware of. Your “take aways” will be a firm understanding of liability insurance and its underpinnings like medical benefits, payouts in the event you are hit by someone without insurance. I expect you’ll benefit from insight into typical coverage and the types of financial losses you can protect yourself from.
Third-Party Liability Coverage All Canadian insurance policies have a component devoted to 3rd party liability. This portion reflects the amount of financial protection you have in the event you are found responsible for injuring or killing another person, or damaging another person’s property. If a lawsuit is brought against you, this insurance will pay claims up to your limit. Most provinces require a minimum of $200,000, but some require more. For example, Nova Scotia requires $500,000.
Statutory Accident Benefits This portion of your policy covers expenses related to any injuries sustained by you during a traffic accident. It does not matter who caused the accident. Benefits cover hospital bills and rehabilitation. It also pays for a caregiver and replaces income that is lost as a result of your trauma. Again, minimum requirements vary by province. For example, Ontario requires $100,000 (outside “catastrophic” injuries) while Nunavut only requires $25,000.
Coverage from Uninsured Vehicles Although every Province and Territory has mandated auto insurance; many drivers on the road still do not have car insurance coverage. In order to protect motorists, insurance companies have added an ‘uninsured’ provision to their policies. This provision provides benefits to you and your family should someone without insurance get in an altercation with you involving damages. This coverage is also used if you’re involved in a hit and run accident, and the offending vehicle speeds away.
Direct Compensation – Property Damage Coverage This feature is mandated in Ontario. It provides benefits in the event your vehicle sustains damage from the actions of another person. There are a few prerequisites that must be met in order for this coverage to take effect. For example, the altercation must occur in Ontario. Also, at least one other vehicle involved in the incident must be covered by an insurance company that is licensed in Ontario.
Identifying The Amount Of Coverage To Purchase Thus far, we’ve discussed the basic components of a car insurance policy as mandated in most provinces (with the exception of Direct Compensation – Property Damage coverage). But the discussion skipped over the larger context of need. Millions of people are exposed to a financial loss because they are buying the minimum amount required by their province’s law. A single court finding could potentially devastate these people financially.
Suppose you live in Prince Edward Island and decide to invest in the $200,000 minimum 3rd-party liability requirement. As the result of unforeseen circumstances, you are found at-fault for a collision that results in the paralysis of the other motorist. Suppose you are found accountable for $2,000,000 in damages. Your insurance company is responsible for the first $200,000, so therefore you are left with a $1.8 Million dollar tab. This sequence of events would financially devastate most Canadians with the minimum required liability coverage.
Millions of Canadian motorists are exposed to this type of situation. Many Canadians purchase the minimum required third-party liability, statutory accident benefits, and uninsured vehicle benefits without understanding they are exposed to a potential financial loss. Again, one accident could have devastating effects.
The irony is that many people neglect to look around for lower insurance rates more than once a year. Many motorists could discover that some insurance agents can provide improved coverage (i.e. higher limits) for the same rates they are presently paying.
Have a close look at your coverage levels. Look into what it would cost to adjust your coverage to a level you feel comfortable with. Online insurance quoting websites can save you time in your search. They can often uncover the car insurance companies that are most interested in insuring you. Discover the cheapest quotes for the coverage you need, and compare this to your present insurer. You might discover that you’re paying less for your vehicle insurance at the end of the day.
Smart insurance shoppers go online, and compare rates from many insurance companies at once. This is a huge timesaver as you can often complete one online form, and then receive insurance quotes from sometimes dozens of insurers. If you’d like a cheap car insurance quote, you’ll need to be willing to wade through the expensive ones.
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