As car insurance myths go, this is one myth that seems to have some real staying power. Many drivers think that their insurance will go down as their car depreciates, but this isn’t necessarily true.
There are several reasons why your rates may not decrease as your car depreciates.
- Your car insurance policy is made up of a variety of coverages. The two that are typically common across most of Canada are:
- 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.
Combined, these two coverages, which have nothing to do with the value of your car, usually make up the majority of your premium dollar.