1. Third-Party Liability
Car accidents can result in serious injuries and even death. Third-party liability coverage can help cover the costs of
claims resulting from injuries or property damage if you are at fault. If your vehicle damages municipal structures or
buildings, costs can quickly add up.
Liability coverage is mandatory in all provinces, but the amount of required coverage will vary depending on the
province you live in. To know how much liability coverage you might need, consult your insurance professional.
2. Medical Payments
Medical Payment, also called Personal Injury Protection, is mandatory in most provinces and pays for medical and
attendant care for you and your injured passengers up to the limit of coverage. Find out from your insurance expert
what the minimum amount of coverage required in your province and what he recommends.
3. Disability Income Benefits
Disability benefits are mandatory in most provinces and provide wage loss compensation for permanent and
temporary benefits to varying degrees based on where you reside. The benefits are usually paid as a percentage of
your normal wage for a set number of weeks if you have a job, or as a set amount for non-earners.
Collision is bumper to bumper coverage for your car. It pays for repairs to your vehicle after a collision with an object
or other vehicle, saving you the cost of paying thousands of dollars in repairs. Many lenders and leasing companies
require collision coverage if your car is financed or leased.
If your car is older or your financing has been paid in full, you may no longer need collision insurance. Talk with your
insurance professional to see if this makes sense for your situation.
Comprehensive is optional coverage for your car that pays for the cost of replacing a stolen vehicle or damages to the
vehicle such as those caused by vandalism, objects falling on the car, fire and windstorms.
Comprehensive is not essential, but it does provide additional protection at little cost. As with collision coverage, if
you own a car of little value, you should ask your insurance professional whether or not to add this coverage.
Depreciation is the estimated loss in value of your vehicle. According to CARFAX , a car loses up to 20 percent of its
value after twelve months of ownership. Insurers use this during a claim to establish the amount that will be paid if
you don’t have GAP insurance to make up for depreciation.
GAP insurance will cover the difference between what the value of your loan or lease is and what the insurance
company is willing to pay when factoring in depreciation. Is GAP essential? Lenders may require GAP insurance for
leased vehicles or car loans; talk to your insurance professional beforehand to get all the details.
Great coverage doesn’t have to be expensive. Here are several ways to manage your costs: Bundle your auto and
home/renter’s insurance – There is savings in having all of your insurance in one place.
Maintain a good driving record – Follow speed limits, practice defensive driving, maintain a safe distance
between cars when driving, exercise caution during adverse weather conditions and limit distractions. These will
keep you safe and your claims low.
Increase your deductible – To lower the cost of collision coverage, you can always raise your deductible from
$500 to $1,000.
Talk to your agent about any discounts that might be available for safe driving and car safety features such as
airbags, anti-lock brakes and security systems.
These seven essentials only begin to explain what auto insurance is all about. To get a full assessment of your
insurance needs and for guidance on the best auto insurance coverage for your situation, contact your insurance