Automobile Insurance

If your vehicle is stolen or damaged in an accident, automobile insurance will cover some or all of the cost of the loss. It also protects you if you cause damage to another person’s car or injury to someone in an accident.

Did You Know?

Auto insurance companies evaluate both you and your vehicle when setting a premium; the make, model and age of the car are used in combination with your age, driving record, where you live, how you use your car (such as for commuting to work) and so on.

Automobile insurance is regulated provincially. Each provincial and territorial government sets minimum mandatory auto insurance coverage that residents must acquire. In some provinces, you can only purchase auto insurance through a government-owned insurance company. In other provinces, auto insurance is run by the private sector.

The right to sue for damages changes from province to province. In many provinces, your rights to sue for damages have been greatly reduced. You should check with your insurance company to find out what the specific rights are in your province.

Ten Tips to Reduce the Cost of Auto Insurance

Anybody who drives a car in Canada is legally obligated to hold auto insurance to protect themselves and other drivers against catastrophic cost. Insurance is a significant part of the cost of operating a car. However, there are ways to reduce those costs. The following pointers will help you save on those costs.

1. Buy a smaller or more economical (cheaper) vehicle that has a lower risk level for the insurance company.

2. Periodically shop around and compare rates at other insurance companies. Get online quotes to save you time.

3. Avoid traffic violations (such as speeding) that could lead to demerits, which will increase your premium.

  • If any past charges are now off your record, ensure the insurance company has removed them when you renew so that your premium will go down.

4. Consider your postal code. Your premium reflects the theft and accident statistics in your neighbourhood.

  • If you are moving, get neighbourhood quotes from your insurance company.

5. Reduce your commute to work to reduce your rate.

6. Carpool or take public transit; leave your car at home.

7. Raise deductibles on collision and comprehensive insurance. If you have enough cash to repair or replace your car, eliminate this part of your coverage.

8. If you have more than one vehicle insured with an insurance company, ask for a discount.

9. Keep your claims low. The more claims you make, the higher your premiums will be.

10. Teenage children?

  • Have your children attend a driver's education.
  • Shop around.
  • Buy an older model vehicle for the children to use.
  • Don't carry collision and comprehensive insurance on the older vehicle; however, keep in mind that, if they have an at fault accident, you will not receive compensation from the insurance company, e.g., for damage and related costs (towing, disposal etc.) to your vehicle.

Common Terms You Should Know

Classification of Vehicle

The classification of a vehicle is a determinant in the premiums. For example, a sports car will have higher premiums than a four-door sedan.

Fair Market Value

Vehicles depreciate rapidly within the first few years of ownership. If your car is in a collision and the insurance company writes it off, they will pay you fair market value for the car (what the car is worth after depreciation).

Liability Coverage for Vehicles Not Owned by the Insured

This coverage allows you to claim for damages incurred while driving any vehicle, including a rented car.

Loss of Use

If your car is in for repairs caused by an accident, and you have loss of use coverage, you can obtain a rental vehicle that is partially or fully paid by your insurance company. The amount the insurance company will pay towards a rental vehicle is limited to a certain amount per day and per claim.

No Fault Insurance

If you’re involved in an accident, your own insurance company will cover your repairs regardless of who caused the accident. The party at fault may have an increase in premiums as a result.

Removing Depreciation Deduction

If you own a new vehicle, you can purchase “no depreciation” insurance for the first two years of owning the car. This type of insurance means that if your vehicle is involved in an accident and the insurance company writes off the vehicle, they will give you the lowest of the following:

  • Actual purchase price
  • Manufacturer's suggested list price when you bought the vehicle
  • Replacement-cost of the vehicle

Uninsured/Underinsured Motorist Coverage

If a motorist, who does not have insurance or has inadequate insurance, hits you and you’re injured, you can make a claim with your insurance company.