Car insurance is a contract made between two parties, in which one party agrees to pay for another party's financial loss in the event of a specified incident (i.e. a car accident, theft of the vehicle, etc). car insurance is designed to protect the driver of a vehicle.
Regardless of how good a driver you are, as soon as you get behind the wheel of a car, there is always a chance that you might cause damage, injury or even death.
Each province and territory may have slightly different requirements. In Ontario, you are required by law to have a minimum of $200,000 in coverage of mandatory insurance.
Mandatory car insurance includes the following:
1) Liability insurance - covers injuries or damages you or someone driving your car causes to other people or property. This includes lawsuit claims against you limited to your total coverage amount.
2) Accident benefits - covers you for any injuries you may have received in the accident, regardless of who caused the accident. This includes costs over and above OHIP coverage.
3) Uninsured Automobile - covers you or other insured persons if you are injured or killed by an uninsured motorist or a "hit & run" driver. It also covers damages to your vehicle caused by an identified uninsured person.
4) Direct Compensation - covers damages to your vehicle that are not your fault (tho the extent that someone else was at fault). It is called direct compensation because you collect from your insurer even though you did not cause the damage. It has been shown on policies as a separate charge since no fault insurance became law in Ontario.
You can tailor your car insurance policy to meet your needs, by purchasing additional coverage that might be important to you. Optional coverage includes:
1) Specified Perils - covers for loss or damage due to a unforeseen circumstance (i.e. fire, lightning, earthquake, riot, etc.)
2) Comprehensive - covers anything that happens to your car that is not a collision.
3) Collision - covers damage to your car caused by an accident that is your fault.
4) All Perils - combines both Comprehensive and Collision coverage.
5) Increased mandatory car insurance - you could increase your third party liability coverage from $200,000 to $1M or even $2M (this will provide additional peace of mind and doesn't cost much more). Likewise, you could increase your accident benefit coverage if you believe that the basic coverage would not be enough for you in the event of an accident.
Before purchasing additional coverage, it is recommended that you check with your employer to see if your work benefits include any of the above. In Ontario, automobile insurance is regulated by the Financial Services Commission of Ontario.
If you are caught driving without valid car insurance you could get a fine ranging from $5,000 - $50,000. And that's not all, your driver's license could be suspended and they may even impound your vehicle.
When you go to apply for car insurance in the future, this charge will be on your record, which could affect your premiums - that's if an insurer will even approve your application.
If you get into an accident while in an uninsured vehicle (driver or passenger) you may not be entitled to receive income replacement benefits and you may not be allowed to sue the at-fault driver for compensation as a result of injuries caused by the accident.
More importantly, if you caused the accident and it resulted in injury or death to another person, you could be held personally responsible for medical costs and other losses.
Make no mistake; the law and insurers do not look fondly upon those who disregard the need for car insurance.
Car insurance can be purchased from:
- a licensed insurance broker;
- a licensed insurance agent; or
- a licensed insurance company
An insurance broker will operate on behalf of a number of different insurance companies. They can typically get you a lower rate because they can easily compare like-for-like products for you.
An insurance agent represents only one insurer.
Some insurance companies will also sell direct to the consumer through a direct writer.
There are 3 things you should consider when looking for car insurance:
1) Shop around to find the best rate. Insurance premiums for the same driver can vary greatly from one insurance company to another, even by thousands of dollars. It's important to do your research, compare the market to make sure your getting the best policy coverage for you at the lowest rate. Compare Car Insurance >
2) Buy from a trusted source. Whether you decide to purchase directly from an insurer or use an insurance broker, make sure the company or person is reputable. The Ontario government regulates the sale of all insurance products, so you can only sell insurance if you are licensed to do so. To check if an insurer or broker is licensed in Ontario, visit the Financial Services Commission of Ontario (FSCO) website or visit the Registered Insurance Brokers of Ontario RIBO website.
3) Read and understand the fine print. It may seem as though most car insurance policies are all the same, but pay attention to the finer details. Specifically look at the terms of coverage and their maximum values, the deductibles, the limitations, and optional add-ons. If you don't understand the wording or something is unclear, ask for clarification. It's also important to find out what the process is for making a claim, when will a claim not be covered, and under what circumstances will the insurer not renew your policy. Any question is a valid question, so ask before you purchase.
This decision is ultimately up to you. But before you commit to anything, make sure you shop around. Compare car insurance quotes offered by insurers and brokers (it's best to get a minimum of 3 quotes). You should make your final purchase with the company or person who provided you with the best service and a competitive rate. The insurance representative should take the time to answer all of your questions and make you feel comfortable about the purchase.
No-fault insurance means that no matter who is to blame for the accident, you can go to your own insurance company to cover costs for damages and/or injury. You don't need to chase the driver of the other vehicle if they are at fault to get their insurance company to cover your losses/damages.
In order to get a car insurance quote the insurer or broker will require the following information:
- your details (name, date of birth, address);
- your vehicle details (type and year of vehicle, condition of vehicle, do you have snow tires, etc);
- your driving record;
- your current broker, agent or insurance company; as well as
- any other driver details.
You should be as accurate and as honest as possible, and if your circumstances change at anytime, update your insurance representative. If you lie or leave anything out it may cause your rates to go up or it could even render your policy null and void, and leave you without protection in the event of a claim.
Car insurance premiums are higher for those who are considered to be a higher risk to the insurer. High-risk drivers are those drivers with a poor car insurance history. For example, if you have had a number of at-fault accidents, or if your policy has been cancelled due to late or no payments.
Premiums are based on the following factors:
- driving history;
- type of vehicle - make, model, year;
- where the vehicle is parked or kept;
- personal details - age, gender, number of years licensed;
- amount you drive the car in a year;
- whether the vehicle is used for pleasure, commuting or business.
If you give permission to someone to drive your car, and that person caused an accident, then the incident will become a part of your driving and your insurance premium will be affected. Therefore, it is important that you only allow trusted, competent drivers to get behind the wheel of your car.
To help you compare service levels of insurers, the FSCO annually conducts an Auto Claims Satisfaction Survey, which shows the level of service consumers can expect from dozens of Ontario insurance companies when making a claim. For survey results visit: FSCO.
Your insurance company will provide you with a summary of the insurance coverage. This is called a Certificate of Automobile Insurance, and will include the following:
- lists the vehicles that are insured and the coverage purchased,
- provides a description of how you were rated for the premiums charged, and
- indicates the period during which you are covered by insurance.
When you receive your certificate, it is important that you read it to make sure the details are correct. You are only covered for a vehicle if your Certificate of Automobile Insurance shows a premium for that vehicle or shows that the coverage is provided at no cost.
Below are just a few items/incidences that will not be covered by your car insurance (for full details of exclusions, please consult your policy details):
- Vehicle repairs - breakdowns, rusting, wear and tear, tire damage, etc, are not covered unless they are the result of an insured peril.
- Loss or damages caused by you or anyone you let drive your vehicle if:
- they are driving under the influence of alcohol or drugs, or
- they are convicted of any one of the following criminal offences:
- causing death or injury by criminal negligence,
- dangerous operation of a vehicle,
- failure to stop at the scene of an accident,
- refusal to provide the police with a breath sample,
- driving the vehicle while disqualified from doing so.
- The vehicle is used to carry explosives or radioactive materials.
- The vehicle is used as a taxicab, bus, or sightseeing vehicle, or to carry paying passengers.
If you are not happy with your existing car insurance provider, or if you have found a better rate with another provider, it is best to only change policies when your existing policy expires. If you cancel your existing policy before it expires, you could be charged a penalty.
When you are approaching the expiry date on your policy, you will receive a policy renewal notice from your insurance company (roughly 30 days prior to expiry). You should look at any policy changes and consider shopping around for lower rate at this time.
If you decide that you want to change policies you should notify your broker, agent, or insurance company right away. If you just stop making payments it may result in a cancellation of your policy due to non-payment, which may put you in the high risk category for the future.
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