What Every Ontarian Should Know About Car Insurance Policies

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Everyone knows that car insurance in mandatory in Ontario. Adequate car insurance is important since the costs associated with an accident can cause significant financial hardship. Insufficient limits on the car insurance policy can be devastating when injuries and property damages exceed the policy coverage. Components of the Ontario auto insurance policy are explained below and the minimum auto insurance requirements for Ontario are explained here.

Third-Party Auto Liability Coverage

In Canada, every driver is required to carry at least $200,000 of liability insurance. This insurance policy component is designated to cover the property damage and personal injuries sustained by third parties. Expenses will add up quickly when in major accidents where surrounding fixed objects sustain damage. Vehicles, people and property can sustain significant damage in a matter of seconds. Many drivers are carrying at least $1,000,000 in liability coverage to ensure sufficient insurance is available. Drivers must remember that litigation costs are covered by the liability component of the policy.

Public property that is damaged in auto accidents will be replaced under the liability component of the driver’s insurance coverage.

  • A driver who slides into a guard rail, which is damaged and must be replaced.
  • A light pole that is knocked down in an accident will be replaced, but the cost is charged to the driver.
  • A collision with a police officer, fire truck, ambulance or city-owned utility truck can be expensive since these speciality vehicles are very expensive.

Statutory Auto Benefits Coverage

Drivers are wise to carry the statutory auto benefits component, which is designed to provide financial compensation to the policyholder in specific situations.

  • Out-of-pocket medical expenses will be paid up to the limit on the policy.
  • Lost work income is provided when the policyholder is unable to work because of accident-related injuries.
  • Other eligible costs, which are listed in the policy documentation, are paid to the policy holder to cover other expenses caused by the accident.
  • Expenses that remain when the other driver does not have sufficient insurance will be paid through this auto insurance policy component.

Auto insurance policies in Ontario can be tailored to fit the driver’s specific insurance needs. Subcomponents, such as replacement income, medical expenses, dependent care costs, funeral costs and death-related expenses, can be added to the policy to provide funds for certain life needs. Removal of these auto insurance subcomponents will reduce the annual auto insurance premium. Other provisions must exist to provide funds in these areas to prevent financial hardship for the auto insurance policyholder.

Property Damage Insurance – for Direct Compensation

Under this auto insurance component, the policyholder’s vehicle is insured for the costs of damage incurred in a collision with another vehicle or stationary object. The limit on this portion of the policy is dictated by the actual cost of repairing or replacing the vehicle. Replacement parts vary in price, so the annual premium will be higher for more expensive vehicles. Insured drivers are covered when the vehicle sustains damage when it is in motion.

The comprehensive auto insurance component must be present on the policy to cover damages that are not associated with an automobile collision. Common examples include fire, theft and vandalism. Storm damage will be covered under the comprehensive component. Damages caused when a tree blows over onto the car will be paid from this subcomponent.


Uninsured Motorist Insurance

Annual auto insurance premiums have been expensive for many hard-working people. Ontario law requires all drivers to carry sufficient liability insurance. In an accident, the insured drivers must have the uninsured motorist component on their auto insurance policy to cover damages sustained in an accident caused by an uninsured, or underinsured, motorist. Not carrying this component could cause significant financial hardship if an accident happens.

Specialized Auto Insurance Options

Auto insurance shoppers are wise to ask questions when determining the best combination of auto insurance components. Inadequate auto insurance is not the same as good insurance at affordable rates. Savvy shoppers will pursue every possible auto insurance discount each insurer offers. Obscure discounts are offered to attract people in various professions that are considered lower risk. The wise driver will remember to consider his lifestyle when assembling the personal auto insurance coverage.

Rental cars – Any driver who rents automobiles when travelling should have rental insurance coverage added to the insurance policy. Rental insurance on the personal policy is more affordable than paying for insurance on each car rental contract.

Removing depreciation deduction – A driver of a car with an auto loan will want to consider carrying this coverage. The replacement price of the vehicle is paid to the policyholder if the car is stolen or written off following an auto accident. Insurers will offer this option for newer models that have been purchased or leased.

All drivers are wise to read the policy documentation prior to signing the agreement. Proper auto insurance is essential for people who want to sleep well at night because the risk of automobile loss has been mitigated.

Looking for information on the MOMS act? We have that covered here.