While automobile insurance is mandatory throughout Canada, nominal requirements vary by province.
These requirements offer little help in suggesting appropriate coverage amounts for motorists because each person’s insurance requirements are unique to their personal circumstances.
The danger is that each province’s requirements cause policyholders to invest in little more than the minimum. This lays the foundation for a potential financial loss.
Just what flavor of insurance should you have, and how much will you need? We’ll delve into these issues, and learn about the associated issues that you should be aware of. Your “take away’s” will be a firm understanding of liability insurance and its underpinnings like medical benefits, payouts in the event you are hit by someone without insurance.
I expect you’ll gain insight into typical coverage and the types of financial losses you can guard against.
Third-Party Liability Every policy has a section dedicated to third-party liability coverage. It indicates the amount of financial protection you have in the event you are declared responsible for injuring or killing another person, or damaging another person’s property.
If a lawsuit is brought against you, this coverage will pay claims up to your limit. Most provinces require a minimum of $200,000, but some require more. For example, Nova Scotia requires $500,000.
Statutory Accident Benefits Any expenses from injuries you sustain from a traffic accident fall under this portion of your auto policy. This is regardless who is found to be at fault for the accident. The cause of the accident is irrelevant, and this benefit covers things like rehabilitation and medical expenses.
It also covers reimbursement for lost income, and costs for a caregiver. Minimum requirements vary by province. In Ontario the minimum requirement is $100,000 outside of “catastrophic” injuries.
Coverage from Uninsured Vehicles Although every Province and Territory has compulsory auto insurance; many motorists on the road still do not have car insurance coverage. In order to protect drivers, insurers have added an ‘uninsured’ feature to their policies.
This feature provides benefits to you and your family should someone without insurance get in an altercation with you causing harm or damage. This insurance coverage is also used if you’re involved in a hit and run altercation, and the offending driver speeds away.
Direct Compensation – Property Damage Coverage This feature is mandated in Ontario. It provides benefits in the event your automobile sustains damage from the actions of another person. There are a few conditions that must be met in order for this coverage to take effect.
For example, the altercation must occur in Ontario. Also, at least one other auto involved in the incident must be covered by an insurer that is licensed in Ontario.
Identifying The Amount Of Coverage To Get Thus far, we’ve discussed the basic components of an auto insurance policy as mandated in most provinces (with the exception of Direct Compensation – Property Damage coverage). But the discussion evaded the larger context of need.
Millions of people are exposed to a financial loss because they are buying the minimum amount required by their province’s law. One court judgment could potentially devastate these people financially.
Lets say you live in Prince Edward Island and decide to invest in the minimum 3rd-party liability requirement (i.e. $200,000). As the result of tragic circumstances, you are found at fault for a traffic accident that results in another motorist death.
A lawsuit is brought against you for which a judgment is rendered amounting to $1 million. Because your insurance limit is only $200,000, you find yourself responsible for paying the balance – or, $800,000. This is not a good financial position to be in.
Millions of Canadian drivers are exposed to this type of situation. Most Canadians buy the minimum requirements for third-party liability, statutory accident benefits, and uninsured vehicle benefits without fully understanding that they are vulnerable to a potential financial loss. Again, one accident could have devastating effects.
It is wise to shop for car insurance quotes on a regular basis. Comparison engines can uncover better premiums but also better values. You’ll often discover that you can get increased coverage for less money.
When you have a chance, consider your minimum car insurance coverage alongside what you presently pay. Have a look into what it would cost to raise your compensation to a level less risky. Online comparison shopping can make quick work of this, and you can often get real-time updates as you tweak your coverage.
Have a look at how much coverage you have right now, and think about what you think is a safe amount. Look into the cost difference as it’s usually a small increase in your premiums. Often times you can find better coverage for less than you presently spend. Take the time to review your auto insurance needs in light of your financial situation.
Investigate how much it would cost to increase your limits to a safe level.
Then, compare car insurance quotes online to find the most attractive package that accommodates your needs. You may be surprised by the deals you uncover online, and see who’s got the best mix of low premiums and reduced risk.
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