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Automobile Insurance Explained

Automobile Insurance Explained

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All about Automobile Policy Coverage

If you are trying to make sense of your automobile policy coverage options and the limits that you need, we can help. We’ve covered the basics to help you read and understand your coverage options and policy language. The following are general terms and coverages. Each province has specific requirements and minimums so be sure to contact us today to ensure you are properly insured in your province.

Comprehensive and Collision

Collision – Covers damage to your car when your car hits, or is hit by, another vehicle or other object. Collision pays to repair your vehicle, less the deductible you choose. For older cars, you may want to consider dropping this coverage, since it is typically limited to the cash value of your car. This coverage is not required, but if you have a loan or a lease, the lien holder may require it.

Comprehensive (Other Than Collision or OTC) – Covers your vehicle, and sometimes other vehicles you may be driving, for losses resulting from incidents other than collision. This includes damage to your car if it is stolen or damaged by flood, fire, falling objects or animals. No province requires that you purchase collision or comprehensive coverage, but if you have a car loan, your lender may insist that you carry it until your loan is paid off.

Selecting Comprehensive and Collision Deductibles

Opting for a higher deductible is a way of lowering your auto premium. Remember, the higher the deductible, the more you’ll pay out of pocket if you have a claim. When deciding on a deductible that’s right for you, take into consideration your available cash, disposable income, the value of your vehicle and your tolerance for risk.

Third-Party Liability and Accident Benefits

Third-Party Bodily Injury Liability (BI) – This covers injuries that you, the designated driver or policyholder cause to someone else. Claims for bodily injury include medical bills, loss of income, or pain and suffering. It does NOT cover the cost of damage to your vehicle, or to you or other people on your policy. It is mandatory in all provinces; however minimums will differ province to province.

Third-Party Property Damage Liability (PD) – Covers you or someone driving the car with your permission if the car damages someone else’s property. Typically the property is another vehicle but it could be a fence, telephone pole, a house, etc. It also provides you with legal defence if another party files a lawsuit against you.
Accident Benefits – This coverage can provide medical expenses, income replacement and other possible benefits to you and your passengers injured in an accident. This coverage is mandatory in some provinces.

Uninsured and Underinsured Motorist Coverage (UM or UIM) – This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. UM coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

Ways to Save on Your Auto Premium

  • Consider raising your deductible
  • Keep up your good driving record
  • Drive less to qualify for a low-mileage discount
  • Drive a car with safety features such as anti-lock brakes, airbags, etc.
  • Install an anti-theft device
  • Ask about our multi-policy discounts

Auto Policy Basics

An Automobile Insurance policy is designed to provide you with a level of protection against property, liability and medical costs if you are involved in an accident.

  • Property coverage pays for damage to or theft of your car.
  • Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
  • Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

Selecting Liability Limits

Everyone in Canada must purchase basic car insurance, however specifics will vary by province. Be sure that in the event of a serious accident, you have purchased enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets, such as your home and savings. By purchasing liability limits to account for both your current assets and future net worth, you can help protect yourself against this risk. We will help you select limits that meet your unique needs.

 

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