This article has been updated from a previous version.
Auto insurance coverage is mandatory across Canada. The amount and type of coverage you need, however, varies by province and territory.
In Ontario, drivers must have third-party liability, accident benefits, uninsured automobile and property coverage.
These insurance options typically handle insured damages for drivers who are injured or have injured someone else, their passengers, and property in the event of a collision. But they don’t cover weather-related damages or your vehicle.
Optional insurance coverage
To protect your vehicle from other perils, you may have collision and comprehensive coverage, which are optional.
Comprehensive coverage typically includes:
- Weather-related damage (hail, wind and debris, fallen tree)
- Fire or natural disaster
- Theft
- Vandalism
- Collision with an animal (deer, etc.)
Collision coverage typically includes:
- Collision with another vehicle
- Collision with an object (fence, tree, guardrail)
- Single-vehicle accident (rollover)
These types of coverage are typically recommended for newer vehicles because of their cost, while some leased vehicles are required to have them by their leasing company. However, as your vehicle gets closer to the end of its lifespan, you may want to consider dropping comprehensive and collision coverage.
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Things to consider before cancelling your coverage
Before you call up your insurance provider and outright cancel your policy, you may want to determine if this is the best choice for you.
Your vehicle’s value
First, determine how much your vehicle is worth. Your car’s age, make, model, accident history, and kilometres can factor into its value. If you have a high-value vehicle, these optional coverages can help cover the unexpected costs of repairing or replacing it.
Your driving history
If you have an older vehicle and a squeaky-clean driving record, you may decide to forgo additional coverage. But if you have been in a collision or two, you may want to have this safety net.
Your location
Some locations have higher rates of crime and claims. If you live in an area known for car thefts, you may want to retain your coverage. This may also be the case if you have a long commute. Being on the road longer increases your risk of being involved in a collision.
Your deductible
Your deductible will determine how much money you may receive from your insurance provider in the event of a collision. If you have a $500 deductible and a $1,300 car, the most you will see from your insurance company will be $800 if you make a claim.
Additionally, you may want to consider your annual premium. Your insurance contract should break down any additional endorsements, so you will be able to see how much you pay for both collision and comprehensive coverage.
If you are paying $200 year over year for these coverages, you could be putting that aside in a “new car fund” instead. You may want to consider this if having these make financial sense for your circumstances.
Your emergency fund
If paying out of pocket would cause you to lose sleep, you may want to keep your coverage. But if you have enough money in your emergency fund to cover the cost of replacing your car, then you may decide to drop your collision and comprehensive.
The value of your car will only decrease with time, so the amount of money that your insurance company will pay out will also be lower.
Your comfort level
Lastly, consider your comfort level. If you are secure with taking on the risk of not having these coverages, it may end up saving you money in the long run. However, if you have doubts or want the additional safety net, your premium and deductible are a small price to pay to put your mind at ease.
Speak with your provider
If you are uncertain about how your deductible works or have any questions, your auto insurance provider or broker is there to help. Consider all your options and determine which one suits your needs.
