Auto insurance - Things Every Canadian Should Know!

While the internet does it simply to analyze policies and rates, it’s still easy to get distracted by all the unknown terms insurance agents use. Auto insurance is one of those troublesome financial needs in life. Although many of us don’t like shopping or spending on it, you’ll be very happy if you’re ever caught in a collision.

How Does It Work?

Car insurance works similar to home insurance, except instead of giving coverage for your residence, your policy gives coverage for your vehicle. The premiums you’ll spend on an insurance organization are based on the insurance company’s assessed yearly cost of embracing your vehicle.

Your auto insurance premiums are determined based on many factors. One of them is the amount the insurance company considers it will have to spend out on titles in the following year. You’ll give your car insurance firm premiums on a monthly or yearly basis in return for getting on your car's peril.

The insurance firm then combines all the premiums it receives from the motorists it shields together into one big pool. The insurance organization uses the pool of premiums to meet the needs of the motorists who make claims in the year.

Who Needs Auto Insurance?

If you’re a driver in Canada, you’re obliged to have car insurance, and skipping out on it can drive to a higher fine. Ontarians found without car insurance, are expected at a fine within $5,000 to $50,000 for an offence, and could also have their driver’s permit discontinued and car seized.

Types of Auto Insurance in Canada?

The type of auto insurance needed in Canada alters provincially, and it’s essential to understand yourself with your province or area's demands to assure you comply.

Third-Party Liability Coverage

The fundamental type of auto insurance is third-party liability coverage. Third-party liability coverage shields you upon paying for the loss you cause to anyone’s assets. It also shields you if anyone else is hit or hurt as an outcome of a car accident done by you. The least coverage differs by province, but at the minimum amount, it should incorporate the medical expenses of anyone hurt in an accident. Third-party liability coverage is compulsory in Canada.

Collision Coverage

The second variety is collision coverage. In extension to shielding you from third-party liabilities, collision coverage further holds you if you drive into anything other than a vehicle. It’s fairly normal for this policy to also defend you if you’re committed in an accident with a motorist who isn’t insured. This more general level of coverage typically takes more than a liability.

Comprehensive Coverage

The third variety is comprehensive coverage. As its name suggests, comprehensively gives the most comprehensive range of protection. Not only does it normally cover medical and collision-related injuries, but it may also defend you in the case of theft and floods. But that comes at a cost, as comprehensive premiums are normally the highest among the three.

Specified Perils and All Perils

Two other optional types of auto insurance you might consider signing up for are specified perils and all perils. As its name implies, specified perils protect you against specific loss to your vehicles like theft or attempted theft, and weather-related damage, such as fire, lightning, windstorms and earthquakes. All perils combine the assurance you receive under collision and comprehensive coverage.

It’s essential to weigh the amount of coverage you need with the premium you’ll pay to find the auto insurance coverage that’s right for you. A lot of us like to shop for auto insurance with the lowest premiums, but as the old saying goes, you get what you pay for. When shopping around, it’s important to also look at the amount of coverage you’ll receive to ensure it’s sufficient. The last thing you want is to end up paying a lot of money out of pocket if you ever need to file a claim.

Is Auto Insurance Different from Province to Province?

Although auto insurance is compulsory for drivers in all provinces across the country, key variations are depending on where you reside. For example, the rates you’ll pay for the level of coverage change considerably from province to province. In most provinces, your only option is to obtain auto insurance from private companies. That being said, some provinces allow private and public auto insurance coverage.

Factors Influence the Cost of Auto Insurance

Your insurance premium might make more sense if you know how it’s determined. Insurance companies rated auto premiums based on several factors including your vehicle’s make and model, your driving history, your age, and gender.

Vehicle Make, Model and Production Year

Your vehicle’s make, model and production year have a major bearing on premium costs. For example, sports cars are typically more expensive to insure compared to sedans. This boils down to two factors: sports cars not only tend to have a higher retail price, but they’re also more likely to be involved in a collision.

Driving History

Your driving history is another big factor. If you’re a very safe driver who’s never received as much as a speeding ticket, you could save thousands of dollars in auto insurance premiums compared to someone who has several speeding tickets and has been involved in collisions.

Demerit Points

Incurring demerit points for driving infractions, such as dooring a cyclist and speeding, can impact the auto insurance premiums you’ll pay as well. Demerit points won’t affect your auto insurance premiums immediately, but they will when the policy comes up for renewal, as long as your insurance company checks your driving record.

Place of Residence

A lot of motorists aren’t aware that where you live can have a big impact on their auto insurance premiums. Some neighborhoods have a history of filing more car insurance claims than others. If your area has a lot of break-ins and collisions, be prepared to pay for it. Although I’m not saying that auto insurance premiums should motivate you to move, it’s certainly something to be cognizant of.

Age and Gender

Two more factors that influence car insurance premiums are the policyholder’s age and gender. Insurance is one of the few industries where companies can legally discriminate based on age and gender in pricing. All things considered equal, you’ll generally pay less for auto insurance the older you are. Men generally pay higher auto insurance premiums than women, as men are known for exhibiting riskier driving behavior.