Exploring the Types of Auto Insurance Coverages and Their Importance
Updated: Dec 6, 2021
Imagine having that dream car of yours right in front of you. You’ve spent years dreaming about that car and saving money just to get it. Now that you have it, you’re suddenly faced with a dilemma: you can’t drive the car because you don’t have auto insurance.
Whether you like it or not, auto insurance is a necessity and is actually required by law. Even if you don’t enjoy shopping or paying for it, car insurance is something you’ll be glad to have when you need it. So, it’s best to try your best to know everything there is to know about auto insurance in Canada.
How Does Car Insurance Work?
Car owners must pay a monthly insurance premium to protect themselves from possible financial loss associated with road accidents and auto theft. The amount you pay for the premium depends on the insurance provider and is usually based on several factors, including but not limited to:
The estimated cost to replace the insured vehicle
The risk associated with the insured motorist
Crime levels in the area where the motorist resides
You need to be extra careful in reviewing your contract because your insurer is not liable to pay for losses that fall outside the scope of your contract. Any little detail you missed could cost you a lot of money, so you need to do your homework and consult your insurance broker.
What Are the Types of Insurance Coverage in Canada?
Understanding what each type of coverage can provide in your auto insurance and its costs can give you a better idea of what you’re getting into. The minimum level of auto insurance required in Canada varies depending on the province, so you must familiarize yourself with the insurance requirements in your province.
Third-Party Liability Coverage
This is perhaps the most basic type of insurance coverage, which protects you against paying for damages you caused to someone’s property or injury to someone. This will take effect in the event that someone is killed or injured as a result of an at-fault car accident that you committed. This type of insurance covers the medical costs of anyone injured in an accident.
This provides financial compensation for damages that occur to your vehicle due to a collision or accident. Collisions involve accidents with another vehicle or a stationary object. This is often one of the most expensive components of any insurance policy, and the premium varies depending on the vehicle, driver, and many other factors.
The third type of car insurance is comprehensive coverage. As the name suggests, comprehensive coverage provides a broad range of protection. It protects you against loss from events that aren’t directly related to the operation of the vehicle or your actions. That means theft, floods, even vandalism are covered by this. Additionally, damages caused by a flying object like debris from another vehicle are also within its scope. But a broader range of protection also comes at a cost.
Driving a vehicle is considered a basic necessity for many Canadians. But once you’re behind the wheel, there’s always the risk of something bad happening. As a driver, it’s your responsibility to get good coverage from reputable insurance companies.
Direct-Line Insurance is your one-stop-shop for all your insurance needs. We are a thriving brokerage that will help you get the kind of protection you need. From home insurance to commercial and car insurance policies, we do all the work and shop for the best deals for you. Contact us today to learn more!