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Did You Know? – November 17, 2009

November 17, 2009

Do you know what factors affect your insurance premiums?

All car insurance premiums are based on risk. Insurance companies must predict how likely it is that a claim will be made, and how much it will cost the insurance company to pay out on that claim. One of those risks is based on your level of coverage.

When it comes to insurance coverage, automobile insurance in each province and territory in Canada is required by law. The amount of insurance coverage you purchase has a direct impact on your insurance premiums. To drive on public roads in Ontario, you must purchase the following coverages:

 

Type of coverage Summary of coverage
 Liability Protects you if someone is killed or injured due to your negligence. The minimum required limit is $200,000, but most individuals opt up to $2 million worth of liability coverage
Accident benefits Provides benefits if you are injured or killed in an auto accident anywhere within North America.
Uninsured motorist Protects you if you are injured or killed by an uninsured motorist or if your vehicle was damaged due to the fault of the uninsured motorist
Direct compensation: property damage This section allows you to claim from your own insurance company for damage to your vehicle caused by someone else who was deemed at fault.

 

Beyond the mandatory insurance coverages, individuals can purchase optional coverages that are not required by law, including:

 Type of coverage Summary of coverage
Collision Collision coverage covers accidental loss or the cost of repairing your vehicle if involved in a collision with another vehicle or object. A deductible is required to purchase collision coverage.
Comprehensive Comprehensive coverage covers accidental loss or the cost of repairing your vehicle if damaged by fire, theft, theft or vandalism, etc.  A deductible is required to purchase comprehensive coverage.
All perils "All perils" coverage combines collision and comprehensive.  It’s the broadest coverage available. A deductible is required to purchase all perils coverage.
 Specified perils This coverage pays only for losses caused by perils specifically listed in the policy.

 

Check back for future Did You Know? segments covering other risk factors affecting your car insurance premium.