Getting your very own car for the first time can be exciting, and with new beginnings like these it is prudent to start off right. Let's take a look at some tips for getting and understanding your auto insurance when you are a first time car owner in Canada.
- Related Read: Twelve Common Myths About Auto Insurance
Auto insurance is the mandatory
Regardless of where you may be driving in Canada, if you plan to drive a vehicle on public roads the vehicle must be covered under an insurance policy with certain minimum compulsory coverages. It is the law in all provinces and territories.
Auto insurance will probably be expensive for new drivers
Unfortunate but true. It's kind of like going to the bank to get a loan for the first time. They want to know about your history before offering you the best rate. Insurance is similar; you have to build a history that shows you are not a high-risk driver, and this takes time.
Factors that go into calculating your insurance rate
There are many factors that go into calculating your auto insurance rate, including:
- Your driving record
How long you've been driving, as well as collisions, convictions and licence suspensions are just a few things that make up your driving record that then get factored into the car insurance premiums you pay.
- Related Read: You Got A Traffic Ticket For What?
- The car you drive
Like individual drivers, vehicles are rated differently even among their own class (e.g. SUV, sedan, or pick-up). Insurance works this way because auto theft rates, vehicle safety ratings, and the historical repair costs for a vehicle can vary significantly.
- Related Read: Top 10 Most Stolen Vehicles In Canada
- Your annual kilometres
The more time you spend on the road, the greater the chance you'll be in a collision. If you work close to home (or take public transit), chances are you'll pay less for your car insurance than someone who commutes an hour a day, each way.
- Where you live
Where you live matters; if you live in a rural area, chances are you'll pay less than someone who lives and drives in a city. The reason? In the city there are more drivers on the road, and the chance of being in a collision is greater. Also, auto theft tends to be more prevalent in urban areas.
- Check out Kanetix.ca's InsuraMap to see what the going rate is for car insurance in your neighbourhood.
The basics of a Canadian auto insurance policy
Each province and territory establishes their own required minimum insurance coverages, however there are two that are typically common across most of Canada:
- Accident Benefits: This pays for things like medical and rehabilitation treatments, funeral expenses, and loss of income due to disability and death that resulted from injuries or death sustained in an accident. It is compulsory in most provinces and territories in Canada.
- Third-party liability: This covers you if you are held legally liable when your vehicle injures someone or damages their property. Third-party liability coverage is compulsory in all provinces and territories in Canada, although in some parts of the country, this is referred to as "Section A." and in Quebec it is referred to as Civil Liability.
Depending on where you live, there may be other compulsory coverages. For example, a standard Ontario car insurance policy also includes:
- Direct Compensation - Property Damage: This covers damage to your car (or the stuff in your car) because of an automobile collision where you are not-at-fault or partially not-at-fault.
- Uninsured: This provides coverage if you are injured or killed through the fault of an uninsured driver, or by an unidentified vehicle like in a hit-and-run.
Optional insurance coverages
In addition to your province's or territory's compulsory coverages, there are optional coverages that you can add to your policy, the most common being:
- Collision coverage: This covers damage to your vehicle as a result of an impact or collision with another vehicle or object.
- Comprehensive coverage: This insures your car against damage caused by events like theft, vandalism, flying and falling objects.
There are also optional endorsements that can be added to a policy, if desired. Some of the more popular endorsements include:
- Loss of Use: Let's say you have collision coverage, and you're in an accident. Loss of use will cover your transportation costs while your car is being repaired or replaced.
- Rental Car: If you frequently rent cars, this endorsement will ensure that your rental has both collision and comprehensive coverage.
- Depreciation Waiver: If you have a new car, this endorsement ensures you will receive the full value of your vehicle should it be considered a total loss.
Portions of your insurance policy may have deductibles (like collision coverage and comprehensive, for example). This is the amount you pay towards a claim, and the insurer will pick up the rest. Many people opt for higher deductibles because it lowers their premiums; do this with care and keep it affordable since this is how much you'll have to pay out of pocket should you need to submit a claim.
Insurance rates vary significantly between companies
Shop around for your auto insurance. As a driver that has never bought auto insurance before, you may be unsure of where to start. Kanetix.ca shops the market for you. No one else covers as much of the market as we do, and we make it quicker and easier for you to get quotes and your coverage from the top providers all in one place. Compare car insurance quotes today for a better price.