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Whether you are a new Canadian driver or have moved to Canada from another country, you can easily be confused at the thought of obtaining car insurance. After all, there are many different types of car insurance policies, and just as many insurance agencies who are vying for your business. You can easily pay more than you should for your car insurance if you do not know where to turn for help. We have created this comprehensive guide to auto insurance in Canada in an effort to help you better understand what you are looking for when shopping for insurance. Please keep in mind that this is only meant to be a general guide. For specific answers to questions you might have regarding your personal auto insurance needs, please consult an insurance professional or visit the Insurance Bureau of Canada website.

How Much Car Insurance Do I Need?

There is no set answer to this question; if there was, it could only be “It depends.” This is not usually a very helpful answer for most people, so we have broken the answer down into several different parts in an effort to help you understand it better.

  • Liability Insurance-Although there are some insurance requirements that apply to all the Canadian provinces, each province also has their own specific regulations regarding how much insurance you are required to have. However, even though the limits might be different from province to province, the only type of insurance you are legally required to carry is liability insurance. This type of insurance covers damage to people or property if you cause an accident.
  • Collision Insurance-This is an optional coverage that helps pay for damage done to your vehicle in the course of an accident, whether it is caused by you or not. Minus a set amount of money that you have to pay out of pocket, usually called a deductible, your insurance company will pay to repair or replace your vehicle if it is damaged.
  • Comprehensive Insurance-This insurance is often also referred to as “other than collision” insurance, and applies to damage done to your vehicle from causes unrelated to a collision. For example, if you run into an animal on the roadway, comprehensive coverage would help pay for the damage done to your car. This coverage also applies when your vehicle has been damaged through vandalism or weather-related incidences such as hail. Some policies also cover theft of the vehicle.
  • Medical Insurance-If you or your passengers are injured in an accident, regardless of who is at fault, this coverage pays for some, if not all, of the medical expenses that are incurred as a result. There are limits to the amount of medical payments that will be made, and you have the option of increasing those amounts if you so desire.
  • Rental Car Reimbursement-This coverage applies if you are required to rent a vehicle to replace one that has been damaged due to a covered claim. For example, if your car needs body work done after an accident, your insurance company will pay for you to rent a vehicle while yours is being repaired.
  • Roadside Assistance-If you run out of gas, your battery dies, or you are stranded due to some other vehicle failure, Roadside Assistance coverage will help pay the towing expenses incurred to move your vehicle to the nearest repair facility. If it is simply a matter of having an empty gas tank or flat tire, your policy will often provide enough gas to make it to the next station, or will repair a flat tire.

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How Do I Know What Optional Coverages I Need?

When you are looking at what kind of insurance coverage you need in Canada, remember that only liability is required by law. However, there are many instances where you would choose to add some, if not all, of the additional coverages offered.

  • If you drive a newer model vehicle or one that has not yet been paid off, you might want to consider both comprehensive and collision coverage. The reason for this is that if your vehicle is deemed a total loss as the result of an accident, you may still have to make loan payments on it even though you no longer have it. Having comprehensive and collision coverage can typically help pay off any existing encumbrances on the vehicle, or replace the vehicle (or provide a payout that equals the market value of the car). In addition, comprehensive and collision coverage can both cover repairs when either the accident is not your fault or is caused by something other than a collision.
  • Older model vehicles are usually less important when it comes to choosing the comprehensive or collision coverages. The premiums for these optional additional coverages are usually considerably more expensive than having a liability-only insurance policy. Since the actual cash value of an older vehicle is usually much less than that of a newer model, you would pay more in premiums than the car is actually worth.
  • Some policies require comprehensive and/or collision coverages to be in place before allowing you to add such items as towing, roadside assistance, or rental reimbursement. If you are the owner of an older model vehicle, you should consult your insurance professional to find out if they are available to you.

What if an Accident is Caused By an Uninsured Driver?

Regardless of the laws in Canada that require drivers to carry a certain amount of liability and property damage insurance, many people make the choice to disobey the law and drive their cars without insurance. While the penalties for those who drive without insurance can be very hefty, they do not compare to the damage done to someone who is in an accident with one of these uninsured motorists. And although coverage for motorists who are not carrying insurance is an optional coverage, it is important enough to belong in a category all its own.

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  • Uninsured Motorist Coverage-This coverage can be purchased as an optional addition to your auto insurance policy, and is intended to protect both you and your vehicle, as well as any property damage that might be involved in an accident caused by an uninsured driver. A typical policy will offer the same limits of liability you carry on your own policy, and will pay up to the policy limit when there is no other insurance involved. For example, if you are involved in an accident with an uninsured at-fault driver, you will have additional monies to pay any additional expenses incurred that your insurance does not cover.
  • Underinsured Motorist Coverage-This is very similar to the coverage for uninsured drivers, except that it applies when the at-fault party does not carry enough insurance to cover all of the expenses involved in an accident. An example of this is a driver who carries only the legally required amount of liability insurance, but the damage done exceeds that. If you have this type of coverage, your insurance company will step in and pay the amount that the other party’s insurance won’t cover.

In either of these scenarios, if you have chosen to pay the additional premium for Uninsured or Underinsured motorist coverage, you can be sure that you and your passengers, as well as your vehicle, will be adequately covered in the event of a collision.

What if I Only Drive Occasionally?

Whether you use your vehicle multiple times a day or once a month, you are still required to carry the minimum liability limits as dictated by the insurance regulations in your province of residence. However, some companies will give you a discounted premium if you only drive short distances or drive very rarely. Consult with your insurance professional to determine whether your insurance company offers a low-mileage discount.

Am I Still Required to Carry Insurance if I Own a Motorcyle?

The short answer to this question is a resounding “Yes!” Whether your motorized vehicle has two wheels or four, having insurance on the vehicle is a mandatory requirement. In addition, there are the same or similar optional coverages available on a motorcycle policy as there are on an automobile policy. Although different types of motorcycles may have different requirements, you should check with the Insurance Bureau of Canada or your existing insurance professional to determine what coverage you need to purchase.

What if I Own a Classic or Collectors Car?

There are several different categories of vehicles that fall under the classic or collectors car category. For a vehicle to be a collector car, it must be 25 years old or older, have the original parts and must also be in mint condition. A classic car is one that is over 25 years old that has been restored to its original condition using new parts (as opposed to original). There are also street rods or racing cars that are newer but are not considered a typical personal automobile. The type of policy you get will depend on which category your vehicle falls under.

Regardless of what type your vehicle is, though, if you take the car to show or drive it only to and from these types of events, the liability insurance coverage you need may be less expensive than for a regular personal auto. In addition, you must have a specialty policy in place; you cannot insure a classic auto on a personal vehicle policy. Again, you can talk to an insurance professional who deals with specialty autos in order to find out more information.

Other Car Insurance Requirements

Although we have covered the basics of personal and classic auto insurance, there are several other instances that will require additional insurance coverage or a specialty policy. Two  of these in particular are for a recreational vehicle or travel trailer, or a commercial auto.

  • Recreational Vehicles-These are defined as a motorized vehicle used for recreational activities such as camping or traveling.  A travel trailer is also considered a type of RV, although the insurance requirements are different. If you own a traditional RV where everything is encompassed into one large vehicle (driver and passenger seats, as well as beds, appliances, bathroom, etc.…), you are required to carry the provincial limits of liability. You can also choose to carry comprehensive and collision coverage, as well as other additional coverages. If you own a travel trailer that is pulled along behind your insured auto, you do not need to have additional liability for the trailer. However, you should consider having physical damage coverage for these types of trailers.
  • Commercial Auto-A commercial auto is a vehicle that is used for business purposes, such as client visits, errand running, and any other activities associated with the business. Other types of commercial vehicles include semi-trucks and trailers used to move goods from one place to another, or taxicabs that transport people from place to place. In all of these cases, carrying insurance is required by law, but the additional coverages are optional. If you use a personal vehicle for business but fail to insure it as such, there will be no coverage is an accident occurs.

Where Can I Purchase an Auto Policy?

Once you have decided what type of coverage you need and want for your vehicle, as well as identified what type of car you have and what category it falls under, it is time to purchase an auto insurance policy. Before making any decisions, you should shop around and get quotes from several different companies. When inquiring about quotes, make sure that you are using the same coverages for each quote; in this way, you can have a true price comparison between companies. There are several useful ways to shop for your Canadian auto insurance. You can use one of the many available online tools to request quotes from several different companies at a time. You can call or visit as many of the agencies in your area as possible and ask for quotes from each of them. You can also talk to your current insurance agent and request a new quote. If you do this, you may find that you can purchase very good insurance coverage at a price that is affordable.

We hope that this guide was able to answer some of the questions you might have about auto insurance in Canada, and that you will be able to decide on the best coverage you can get with the amount of money you have. Just remember that there are insurance regulations in place that require you to carry the minimum limits; if nothing else, make sure you are covered for that amount. It can save you a lot of problems and money in the future.

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