In Canada, auto insurance is mandatory. With so much to consider when buying car insurance in Canada and each province requiring a different level of protection, it can be confusing.
However, understanding auto insurance isn’t as tricky as it’s made out to be. Whether you’re a teenager who has just received their licence and are ready to purchase that first car, or you’re a more seasoned driver looking for a refresher – this article can serve as your lesson in auto insurance 101.
What is Auto Insurance?
The Insurance Bureau of Canada (IBC) states that auto insurance offers protection to the driver, occupants and potentially any pedestrians involved in a collision with the vehicle.
Furthermore, depending on your province of residence, if you’re injured in an accident your insurance company will:
- Help provide the medical/rehabilitation care to get you well
- Provide financial assistance if you are unable to work
- Provide financial protection if you hurt someone and are sued
IBC further states you cannot obtain a vehicle registration unless you first provide proof of insurance.
Types of Auto Coverage
According to the Canadian Government, some provinces may require more coverage than others.
In general, however, when purchasing insurance, the following coverage is mandatory:
- Liability Coverage – Protects you if you are in a collision and you are held liable for the injury to or death of other people. It also covers damage to their vehicle or property.
- Accident Benefits – Covers medical bills, rehabilitation, funeral costs, and loss of income due to disability (not applicable in Quebec).
- Direct Compensation Property Damage – Covers you for damage to your vehicle and to property inside it when another motorist insured in your province is responsible for the collision. (Ontario, New Brunswick and Nova Scotia)
No matter which insurance provider you’re with, Canadian provinces and territories require drivers to have mandatory coverage.
Understanding Enhancements and Optional Coverage
Enhancements (or “endorsements”) are optional coverage you can add to your policy. They enhance your policy by providing an additional, specific benefit, depending on your needs. Every insurance company offers its own variation of optional coverage; Allstate Insurance Company of Canada (“Allstate Canada”) offers the following:
- Collision or Upset – Covers the cost of repair or the replacement of your car (up to its actual value, less your deductible) if you have a collision.
- Comprehensive – Covers windshield damage and other damage to your car due to theft, vandalism, fire, falling objects, lightning, explosion, or impact with an animal.
- Specified Perils – Covers certain damage to your car by such dangers as fire and lightning, theft or attempted theft, windstorm, earthquake, hail, explosion, riot or civil unrest, falling aircraft or parts of an aircraft.
- All Perils – Combines the protection provided by Collision and Comprehensive coverages.
There are several additional coverages to choose from; below are the more common ones offered by Allstate Canada and that can be added to an auto insurance policy.
- Claim Forgiveness – Your first claim is on us. Your rates will not go up.
Disappearing deductible – Your deductible goes down every consecutive term you go without a claim until it disappears.
- Ticket Forgiveness – Your rates will not go up if you get a ticket for a minor driving offense.
- Loss of Use – Covers the cost of a backup vehicle (such as rental or taxi) used when your vehicle is being repaired as a result of damage or theft.
- Damage to a Non-Owned Vehicle – Additional coverage if you damage a vehicle you do not own, such as a rental.
- Waiver of Depreciation – This option ensures you get the full value of your new car (less than 36-months-old) if it is written-off as part of a covered claim.
To learn more about the various types of coverage be sure to visit www.allstate.ca.