First to explain how auto insurance or insurance coverage works. Insurance is a means of sharing risk across many individuals. Insurance providers need individuals to pay an insurance premium. In return the insurance provider agrees to pay for costs related to an accident with the. On average most individuals purchasing insurance policies are not involved in accidents, the money you paid that did not go to an accident you got in is known as an insurance premium. Your insurance premiums pay for a small percentage of accident costs other policyholders are involved in. Now you know the basic workings of insurance coverage. Time to move onto the different types of car insurance coverage. There are many options available so understanding each means you can choose the right fit for you.
The only mandatory form of auto insurance across Canada is Liability insurance. This type of insurance provides a two-fold coverage. Part one provides financial coverage to the driver for losses sustained by others. This can be in the form of injury, death or damage to property. The second part of liability insurance is also referred to as accident benefits. Accident benefits provide financial help to the driver against financial expenses. Accident benefits cover costs related to personal suffering such as medical expenses and loss of income. Accident benefits coverage is mandatory across Canada except Newfoundland and Labrador.
Collision coverage pays for damages to the policy owner's car in the event of an accident. This is regardless of whether the collision was with another car or stationary object. Collision coverage can range in price depending on the vehicle and driver.Comprehensive coverage compensates for damages to the policy owner's car that are not related to an accident. Examples include: vandalism, theft and environmental occurrences and damage from flying objects while parked.
In summary, understanding auto insurance comes down to these points. By law in Canada the Liability Insurance is the minimum level of insurance required. Cost of coverage can depend on many factors including the type of coverage you buy. Individuals with newer vehicles may prefer to buy extra coverage to protect their vehicles. On a side note: when leasing or financing a vehicle many dealerships require Collision and/or Comprehensive coverage to protect the vehicle until the end of the lease or until the vehicle is paid off.
Insurance can be tricky but we can make it simple. Our auto insurance team can explain everything in simple terms. We are here to give you the information you need to make the best decisions.
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