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What Every Ontarian Should Know About Car Insurance Policies

December 14, 2010

Car insurance policies can be confusing, but it’s important to fully understand your auto insurance policy and feel comfortable that you have the appropriate and necessary coverage to protect you in the case of an accident or injury. The following article will briefly explain the components of your car insurance in Ontario.

Third-Party Liability Coverage

Third party liability coverage is an extremely important part of your car insurance coverage, and the only insurance coverage on your vehicle that is mandatory as legislated by the Canadian government. This portion of your policy dictates the amount of coverage you have if you cause injury to another person, or damage to someone else’s property. To meet the minimum amount of required liability insurance, you must carry at least $200,000 of insurance. However most consumers choose to carry a minimum of $1,000,000 in coverage to give them peace of mind that they will not be financially liable for any damages in the case of a major accident, despite rising health care and funeral costs.

Statutory Accident Benefits Coverage

Your statutory accident benefit coverage provides you with financial compensation if you are injured in a car accident. This will cover your out of pocket costs for medical expenses, provide replacement income if you cannot work following an accident and reimburse you for other eligible costs that may arise. This auto insurance coverage is in place in case you cause an accident, or if you are injured by a non-insured or under-insured driver.

With recent changes to auto insurance in Ontario, you can choose to make very specific modifications to the level of coverage you carry in this area – including income replacement benefits, medical and dependent care benefits, or death and funeral benefits.

Direct Compensation – Property Damage Coverage

This is the part of your car insurance policy that protects your vehicle and contents. Should your vehicle be damaged in an accident, this coverage will ensure that you do not have to pay for your losses (other than your deductible). This part of the policy only applies if the accident occurs in Ontario, includes at least one other vehicle, and at least one of the other vehicles involved is insured with a company that is contracted to provide this type of coverage.

Additional benefits as part of this auto coverage can include Comprehensive Coverage – which pays for damaged caused to your vehicle as not part of a two or more car accident (such as vandalism or striking an object), as well as Collision or Upset Coverage for rollovers. All Perils Coverage can include all of the above.

Uninsured Automobile Coverage

Uninsured automobile coverage is important to protect you from irresponsible, uninsured drivers. If an uninsured driver causes injury or death to you or a family member or damage to your vehicle, this coverage will provide you with financial compensation.

Additional Coverage

There are many different insurance options available from seemingly countless insurance providers, and it is up to you to choose the right levels of protection at the price that works for you. Examine the specific types of optional coverage may make sense for you and your family. For example, if your family regularly rents vehicles, including rental insurance coverage in your regular auto insurance policy would likely make more financial sense than paying for it individually each time your rent a car. For new vehicles you may want to consider the additional benefit of Removing Depreciation Deduction – which gives you full replacement value of your vehicle if it is stolen (and never recovered) or written off in an accident. This coverage is often limited to the first few years of vehicle ownership, and can apply to both purchased and leased vehicles.

Now that you know the terminology and the basics, shopping around is key to obtain the most appropriate levels of car insurance coverage, while maintaining a reasonable premium that you can afford. A quick and easy online car insurance quote can help you secure the best value for your insurance dollar.