Important Points One Should Know About Auto Insurance in Canada

Once you buy your favorite car, the next thing you wish to do is to take an auto insurance policy for it. Auto insurance has become an important financial necessity of today. Canada has made auto insurance mandatory. Various factors related to auto insurance in Canada are types of insurance and factors influencing the premium cost as seen here.

Other things one should know include:

  1. What insurance is mandatory and what is optional?
    and…
  2. How the premium is calculated.

Read on to find out the answers to these questions.

Factors involved in calculating the premium of auto insurance

Generally, lesser the cost required for repairing, lesser the premium of the insurance. The following factors are considered by the insurance company while calculating the premium.

  • The location where you live
  • The vehicle details including model, make, and production year
  • The individual’s driving records who will drive the vehicle

What to do if one is unable to secure auto insurance

If you are unable to buy the auto insurance due to jurisdiction and other reasons, you can seek help from facility association. It is a non-profit association funded by casualty and property insurance industry.

It works in collaboration with selected insurers and ensures coverage to all those who are unable to buy auto insurance.

Mandatory Coverage

Following coverages fall under mandatory coverage.

  • Direct compensation property damage is required
  • Minimumcompulsory third-party liability- An amount of $200,000 is obtainable for one accident. If claims of property damage and bodily injury, the property damage payment is approximated to $10,000.
  • Expenses for the funeral- If the coverage for optional indexation is covered, the amount covered maybe $6000 and above.
  • Medical payments- It covers $3,500 for a minor injury. For non-catastrophic and non-minor injury $65,000 for a period of 5 years, and an amount of $1 million for serious or catastrophic injury.
  • Death benefits- These benefits apply when the death of the accident victim happens within the 180 day period. In this case, $10,000 is awarded to the surviving dependant, $25,000 for spouse and $10,000 to the guardian.
  • Loss of income- 70% of the wages are given. This includes a minimum of $185/week and a maximum of $400/week for a period of 104 weeks.
  • Pain and suffering- If the pain and suffering meet the threshold and serious disfigurement is caused to mental, physical or psychological functioning.
  • Economic loss for no-fault benefits- It depends on net income and the amount is taxable. The injured can claim for 70 percent of the income. This also counts for rehabilitation, medical and all related costs. This is when the severity of injury meets the pain and suffering claims.
  • To benefit with all the auto insurance coverage, you can opt for any private insurance company. The above-given coverage is general and may vary with respect to different insurance companies in terms of benefits and awards.

Additional coverage

Along with the mandatory coverage, some additional benefits are included by some of the insurance companies. These minimum standard coverages are established by the territorial and provincial governments, that every automobile owner is supposed to have. These additional coverages include:

  • Specified perils
  • Collision
  • Comprehensive perils
  • All other perils

Need for auto insurance in Canada

It is a serious offense to drive without insurance and might lead to harsh penalties which include license suspension and a heavy fine. Some of the provinces do not provide vehicle registration if you have not availed the auto insurance.

Besides that, there is a possibility that an accident can cause injury to you or another person, damage the property, kill yourself or the other driver. You might risk yourself, your health, your home, your savings, and other assets.

Discounts given by insurance companies

While deciding to choose an insurance company, one looks for factors like coverage options, comparative prices, quality of service and more. To have a stronghold in the market, different insurance companies offer different discounts. Some of the discounts are for:

  • Drivers who have a graduate degree of a driver-training course
  • Cars that have devices for loss prevention
  • More than 2 cars of private passenger type from the same house
  • Car insurance combined with other covers. For example, car and house insured together
  • Drivers who have never filed an insurance claim
  • Drivers more than 55 years of age
  • Cars that are never going to be used in winter
  • Loyal customers renewing their existing insurance

Canadian Loss Experience Automobile Rating (CLEAR)

The CLEAR system is used by most of the insurance companies to rate vehicles that have come in for insurance. CLEAR rates these cars based on different factors. The cars that have higher ratings are offered low premiums. Different factors that judge the rating of the car include:

  • Safety record
  • Cost to replace or repair car parts
  • Susceptibility to theft
  • Susceptibility to serious damage

Just remember that insurance is important. Don’t drive anywhere without at least minimum liability insurance!

Image credit: Auto Insurance via /Shutterstock

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