No one fully prepares you for the first time you shop around for auto insurance. It can be both exciting and perplexing. For instance, it’s natural to be confused about the differences between collision, comprehensive, and third-party liability coverages, let alone rates and how to find cheap auto insurance.
Each province also has its own set of rules and insurance providers. For instance, in British Columbia (BC), every BC citizen must have an ICBC Autoplan basic insurance cover —offered by the provincial Crown Corporation. Similarly, in Quebec, all residents obtain auto insurance from the SAAQ – a government-managed insurance agency.
Only six provinces, including Alberta, Ontario, P.E.I, Nova Scotia, Newfoundland, and Labrador, have full private auto insurance systems.
We have styled this article in a question-and-answer format, so you can quickly skip to sections that are of most interest.
How do you find the best and cheapest rates?
Shopping around is the best way to get the cheapest rate for your auto insurance. If you’re working with an insurance broker, you can ask them for different quotes. Don’t know an insurance broker? Getting insurance quotes has been made easier by online platforms such as Surex.
Is it a requirement to have auto insurance?
Driving without valid auto insurance can attract penalties ranging from $5000 to $50,000. The vehicle may be impounded, and you might lose your driving privileges following a suspension. There will be other long-lasting consequences. Insurance companies view drivers with prior histories of traffic convictions as high-risk. They may charge higher premiums or deny coverage.
Which types of coverage are mandatory?
The standard auto insurance policy will have different types of coverages depending on the jurisdiction. But you can expect the following coverages:
Third-Party Liability Coverage
It may go by various names, for instance, the civil liability insurance coverage in Quebec. The coverage protects you against claims brought about if you’re vehicle is involved in an accident resulting in:
- Property damage;
- Bodily injury.
The insurance company will settle claims brought against you if the accident is your fault. Each jurisdiction specifies the minimum amount of third-party liability coverage you need. In Ontario, it’s $200,000, but you can increase your coverage to $5 million. More coverage means that you have the financial capabilities to settle claims that resulted in added-up costs.
Accident Benefits Coverage
Accident Benefits ensures that the insurance company will still pay for your medical expenses and rehabilitation costs resulting from a motor vehicle crash regardless if you were responsible or not. It’s also important to inquire if this coverage extends to your passengers and the limits imposed per person.
Who sells car insurance?
You have different avenues of obtaining car insurance, including:
- Purchasing through an insurance agent who is likely representing one insurance company;
- Working with insurance brokers who sell auto insurance plans from different companies. On request, brokers may help buyers find the most affordable plans;
- Purchasing insurance from direct writers. It means that you will work with the insurance company on a one-to-one basis.
Which auto insurance covers are optional?
The standard auto insurance plan is often not enough for most people. For instance, third-party liability coverage does not offer compensation for any repairs to your car. Two common extra coverages include:
- Comprehensive coverage – The insurance company pays for other types of losses listed in the insurance agreement, such as theft, earthquakes, explosions, etc. All perils coverage includes protections from all perils. It’s a hybrid of the collision or upset and comprehensive coverages.
What factors determine the car insurance premiums I will pay?
The cost of your car insurance premiums depends on many factors, including:
- Age and driving experience;
- The level of deductibles;
- Coverage options – you pay less for the standard cover and more for other extras;
- How cheap or expensive an insurance company is;
- Location – on average, BC drivers pay the highest insurance rates;
- Gaps in your insurance history;
- Driving history;
- Past insurance claims – history of claims such as theft or accidents may increase premiums;
- Particulars of the vehicle – including age, safety features, attractiveness to thieves, value, and size;
- Availability of discounts’
- Car ownership status – leased cars tend to be more expensive to insure.
What is a deductible?
A deductible is simply the amount you need to pay out-of-pocket before the insurance company settles your claim. Not all insurance coverages have deductibles; mostly, it applies to collision and comprehensive coverages. By electing to pay higher deductibles, your insurance premiums may decrease.
What is pay-per-mile Insurance?
Also called telematics insurance, it’s a new insurance system taking root in Canada where you pay insurance premiums based on the distance you drive. It can lead to cost savings if you don’t use your car as often. The insurance company will install a telematics device to track the car’s mileage and driving behaviour.
What is the difference between at-fault and no-fault insurance systems?
At fault or no-fault insurance, systems can be pretty confusing. The no-fault insurance system, also called direct compensation property, is available in Ontario, Quebec, Nova Scotia, New Brunswick, Saskatchewan, and PEI. It means that regardless of the party liable for the accident, the insurance company will pay for damage to your vehicle and its contents.
You collect compensation from your insurance company, while in the at-fault system, the other driver’s insurance company pays for damages if the other party is at fault. For this system to work, the accident must have taken place in a province with the no-fault system, and the insurance companies must have signed agreements to offer the coverage.
Who is a high-risk driver?
“High-risk driver” is the term insurance companies use to describe drivers who have a higher risk of filing claims. Four key things will make you a high-risk driver, including:
- Prior history of car accidents;
- Driving under the influence charges;
- Stunt driving charges;
Why am I paying more as a young driver?
Young drivers are also considered high-risk drivers because they don’t have enough driving experience. Collision statistics also indicate that young drivers are more likely to get into accidents. They are prone to overspeeding and not taking all the required safeguards like wearing seatbelts. In your thirties, you may discover that your insurance premiums are going down. Senior drivers are also considered high-risk and have to contend with higher insurance costs.
Keep in mind that shopping around is one of the best ways to keep your insurance costs down. Ensure that you have adequate coverage and just don’t focus on the expense. If you have a newer car with good value, it’s always worth paying for a comprehensive cover.