Having auto insurance isn't just a legal matter, it's an important decision that needs to be made with proper research. Understanding exactly what each policy offers is important in knowing how protected the driver will be in case of an accident.
Each province and territory governs their own insurance industry. Insurers offer auto insurance within a strict framework of provincial laws and are supervised by government agencies, including rate review boards as well as federal and provincial regulators. Auto insurance companies deliver a product that has been defined by these laws and regulations.
Auto Insurance Competition
The competition among auto insurers is fierce. There are hundreds of companies that advertise that they have the cheapest rates. As the old saying goes, buyer beware. Many factors are taken into consideration when receiving a quote with a person's driving record being at the top of the list. If a person is shopping for cheap insurance rates, they may be settling for basic coverage.
In the province of Ontario for example, the mandatory automobile insurance coverages are:
- $200,000 of third party liability.
- Statutory accident benefits.
- Direct compensation-property damage.
- Uninsured automobile coverage.
The good news, given a good driving record, a driver can have cheap insurance premiums while having the legally-mandated coverage. However, in case of a serious accident, then the reality of this minimum coverage can hurt more than the sustained injuries.
Third Party Liability
This part of an automobile insurance policy protects the driver if someone else is killed or injured, or their property is damaged. It will pay for claims as a result of lawsuits against the driver, but only up to the limit of the coverage. In Ontario, the minimum $200,000 for third-party liability won't help a driver much if sued. Topping up to $1 million is recommended.
Statutory Accident Benefits
Currently, $100,000 is provided to Ontario drivers if injured in an automobile accident, regardless of who caused the accident. Benefits include supplementary medical, rehabilitation, attendant care, caregiver, non-earner and income replacement benefits. However, the current Ontario government is looking to slash this amount to $25,000. Drivers need to be aware that it's highly recommended to speak to an insurance broker or agent to have this amount increased to $1 million. The cost to do so is nominal.
Increasing Statutory Accident Benefits is important to consider, especially if a family does not have health benefits. Increasing any one or all of these is optional:
- Income Replacement Benefits
- Medical, Rehabilitation and Attendant Care Benefits
- Caregiver Benefits
- Dependant Care Benefits
- Death and Funeral Benefits
Direct Compensation-Property Damage Coverage (Ontario)
This section of an automobile insurance policy covers damage to the driver's vehicle or its contents, for loss of use of the vehicle or its contents, when another person was at fault for the accident. It's called direct compensation because even though someone else causes the damage, the driver collects directly from their own insurer. However, there are conditions applied to this and if they are not met, then making a claim under the collision coverage (if the driver has it) is an option.
Uninsured Automobile Coverage
Each province requires that every car on public roads must be insured, however there are those who break the law and drive without insurance. This coverage protects a driver and the driver's family if injured or killed by a hit-and-run driver or by an uninsured motorist. It also covers damage to the driver's vehicle caused by an identified uninsured driver. This coverage ranges from none in Alberta to as much as $200,000 in Manitoba. In Ontario it provides $25,000.
It's very important to know exactly what is in the policy being considered. If currently in a policy, it's never too late to call and request upgrades. Always ask an insurance broker or an agent questions as it is their job to provide potential customers with information using lingo that is easily understood.
For more information visit the Insurance Bureau of Canada's web site or call an auto insurance broker.
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