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Common Accident Coverages

Your guide to understanding common accident coverages in Canada.

Common Accident Coverages

Canadian roads are busier than ever, the number of car insurance claims is on the rise, and the cost per claim is increasing too. With this in mind, it is important you understand the coverage provided by your car insurance policy.

Every driver has different needs when it comes to auto insurance. This guide will help you understand the most common accident coverages. Once you are ready, compare quotes with Rates.ca. We’ll find you the right policy for the best price.

Is it mandatory to have car insurance in Canada?

Is it mandatory to have car insurance in Canada?

The law is clear. Every Canadian vehicle owner must have auto insurance. It is compulsory in all territories and provinces. If you are caught driving without insurance, your license can be suspended, your vehicle can be confiscated, and you will face a hefty fine.

In Ontario, for example, fines range from $5,000 to $25,000 for a first offence. You must also pay a 25 percent victim fine surcharge (e.g. an extra $2,500 if you receive a $10,000 fine). For a second offence, fines can be up to $50,000. It’s a serious offence not to carry car insurance.

Even if you get lucky and escape with a fine on the lower end of the scale, your future insurance premiums will increase dramatically.

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What insurance do I need to drive in Canada?

Each province has its own rules and regulations when it comes to mandatory coverage, but there are some commonalities. All Canadian car insurance policies must include the following:

Third-party liability (TPL)

If you are responsible for an accident in which someone is injured or killed, or their property is damaged, TPL will help cover the cost of lawsuits against you up to your coverage amount. The minimum amount of required coverage is $200,000, but most drivers opt for at least $1 million. In Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island, TPL contains a component called direct compensation property damage (DCPD). If you are in an accident where you are deemed not-at-fault, DCPD coverage means your insurer will pay for repairs, without having to recover damages from the other driver.

Uninsured automobile

This coverage protects you if an uninsured driver crashes into you and you are found not to be at fault.

Accident benefits (AB)

Accident Benefits insurance is mandatory everywhere except for Newfoundland and Labrador. If you are hurt in an accident, this coverage will pay for income replacement, medical treatments, and even funeral costs should you succumb to your injuries.

What is recommended for car insurance coverage?

While third-party liability, uninsured automobile, and accident benefits insurance are mandatory across the country, there are many optional coverages and endorsements that you can add to your policy to increase your coverage at an additional cost.

The most popular optional coverages are collision and comprehensive insurance. In fact, they are mandatory in Saskatchewan and Manitoba, and typically required by the lender if you have taken out a loan for your car.

  • Collision coverage pays for repairs if you collide with another vehicle or object, even if you are at fault or someone else was driving your car. If your vehicle is damaged beyond repair, collision coverage will help pay for a replacement. Considering the cost of auto repairs, especially to higher end vehicles, it is often sensible to include this when requesting an insurance quote.
  • Comprehensive insurance covers the cost of repairing damage caused by vandalism, theft, fire, natural disasters and other hazards, even when your car is parked and unattended.

Other common coverages include loss of use and depreciation waiver insurance.

  • Loss of use insurance will cover transportation costs if you are in an accident, and your vehicle is temporarily unavailable due to repairs.
  • Depreciation waiver insurance is recommended if you have a brand new car. It ensures you receive the full value of your vehicle following a write off.

What is full car insurance coverage?

What is full car insurance coverage?

You may have heard the term “full coverage.” There is no clear definition (it means different things to different people), but in Ontario, full coverage implies an insurance policy with third-party liability, DCPD, uninsured auto, collision and comprehensive coverage.

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How much coverage do I need?

How much coverage do I need?

Aside from choosing which coverages to include in your policy, you also have to decide how much coverage you will need. Each province has a minimum required amount, but it’s not always enough. When deciding how much you will need, consider the value of your car, and the financial consequences of a serious accident.

For example, if your insurance policy has a limit of $20,000 in damage repairs, but your new car has $25,000 worth of damage, you’ll have to pay the additional $5,000 yourself on top of your deductible. Do you have enough saved to cover the shortfall? If not, consider paying a higher premium for more protection.

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Comparing Policies with Rates.ca

Every driver has different requirements when it comes to car insurance. Your specific needs will depend on your location, your driving history, your car, how often you drive, and multiple other factors. While adding coverages to your policy will increase the annual premium, it could save you a fortune down the road (pun intended).

All drivers need affordable premiums with adequate coverage, and this is where Rates.ca can help. In just a few minutes, you get multiple car insurance quotes in one place. Compare quotes, and secure a great deal on car insurance today.

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