10 Things You Need to Know About Car Insurance
4 minutes to read
If you own a car in Canada, having insurance is mandatory. Here are 10 things you need to know about car insurance in Canada.
1. What coverage kinds must I carry?
All drivers in Canada must carry the minimum amount of third-party liability insurance required by the laws of your province. Coverage requirements will vary between provinces, and if you have a car loan, the lender will mandate extra coverage to protect their investment. Lenders most often require collision and comprehensive coverage along with minimum liability coverage. Every provincial government in Canada decides the minimum level of liability insurance for its drivers. Moving to a new province may include adjusting car insurance limits to meet that province’s requirements. Lenders have a right to demand that a borrower purchase certain car insurance levels, and these requirements are part of the lender’s terms and conditions. Borrowers must comply with the loan agreement’s terms or face lender action.
2. What is ‘accident forgiveness’?
Accident forgiveness maintains a driver’s auto insurance premium rates after an at-fault accident. By not raising the driver’s premiums after a first accident, the insurance company ‘forgives.’ However, adding accident forgiveness to the car insurance policy is important before an accident occurs.
Most insurers charge higher premiums for this option. Note that an insurance company’s accident forgiveness terms and conditions may not cover a driver’s specific damages. All car insurance companies in Canada have different limits or exclusions cited in their accident forgiveness terms. Of course, accident forgiveness doesn’t travel with the driver when a change in insurance providers occurs.
3. What is a deductible?
A car insurance deductible is the amount of money the driver pays when settling a car insurance claim. For example, if the Canadian driver carries collision and comprehensive insurance, he may have two potential deductibles (one for each coverage, and they can be different amounts). The deductible amount is relevant in almost every comprehensive claim scenario. For collisions, the deductible applies only when the driver is determined ‘at-fault’ in an accident. If the driver’s vehicle is damaged by an unknown third party, the highway patrol may write the driver ‘at-fault.’
In most cases, the driver’s insurance company subtracts the deductible from the money needed to pay the claim. Agreeing to a higher deductible can help a driver receive lower car insurance premium rates. Conversely, smaller deductibles usually imply relatively higher car insurance premiums. If you’re a good driver and willing to assume more financial risk if an ‘at-fault’ accident happens, higher deductibles can help save money on car insurance.
4. Why do I have ‘no-fault’ insurance? Is that a good thing?
‘No-fault’ insurance is a process that hopes to reduce the time necessary to pay claims. Each insurance company involved in the claim pays the claim of their insured.
The insurance company or companies don’t seek damages from the insured driver determined ‘at-fault.’ ‘No-fault’ insurance doesn’t protect an ‘at-fault’ driver from rising car insurance premiums.
5. How does my insurance company decide what my car is worth after an accident?
A “total loss” can involve offering the driver the depreciated value, not the cost of purchasing a new car. However, drivers of a new auto can purchase an optional ‘waiver of depreciation.’ In the event of a car accident within two years of the new car’s purchase, the driver receives the cost of a new car– not its depreciated value. The ‘waiver of depreciation’ must be written into the insurance policy before an accident happens; it cannot be retroactively purchased. Drivers without the ‘waiver of depreciation’ receive the car’s depreciated value as determined by the insurer.
6. Can I shop for new car insurance before my old policy expires?
Nope. There’s no reason to wait for an existing car insurance policy to expire before shopping for new car insurance rates. Shopping and comparing new car insurance quotes can save money. A great to know if you’re overpaying for car insurance in your city and province is to request competitive car insurance quotes from this free tool.
When changing insurance providers before a policy expires, note whether a ‘cost of cancellation’ penalty is present. Ask about additional fees in a new policy to compare the actual coverage amounts from both insurers. Since there is no cost to compare competitive auto insurance rates, it’s a great practice to regularly shop for car insurance.
7. What is the difference between a car insurance broker and an agent?
Drivers in Canada can purchase car insurance direct from the insurance company, from an insurance agent, or from an insurance broker. An agent works directly for only one insurance company. They can only sell that company’s insurance. Unlike the agent, a broker has access to many insurance companies’ products and services. The broker helps to compare different coverage choices and costs. The selection of which car insurance to purchase from the broker is always yours.
8. What is the best way to get a good quote on insurance?
Requesting online insurance quotes is fast, easy and accurate; you can easily get your best quote within a few minutes. The driver seeking auto insurance quotes only needs to answer questions about accidents, tickets and the car he wants to insure. Consider whether the vehicle is used for personal use only or in a commercial situation. An auto insurance quote provided online or on the phone from an insurance company can change as driver history, vehicle details and habits come to light.
9. How soon must I report a new vehicle to the insurer?
Many insurance companies give their insured up to 14 days to inform them of a new purchase. If the car is used, the purchasing driver must also update the insurance company. The insurance company backdates premiums from the purchase date to ensure continuity of coverage. It’s best to advise the insurer of your newly purchased vehicle as soon as possible.
10. Must I add people who drive my car to the insurance policy?
Drivers can let any licensed driver (as per insurance policy terms and standards) drive his car and they will be covered by the insurer in the event of a car accident. However, if another person has an accident in your car, you will bear financial responsibility for the accident. If the driver is deemed ‘at-fault,’ your auto insurance rates could rise. Regardless of whether the driver has her own auto insurance policy, your car insurance policy is in force in your vehicle.
All points discussed within this article could be some great questions for you to ask your insurance broker the next time you speak.