Nowadays, owning a vehicle is more of a necessity than a luxury. With this necessity comes the responsibility of insuring your vehicle, commonly referred to as auto or car insurance. This article will provide the essential coverages, options available, and how best to navigate the insurance market.
The Need for Auto Insurance
Auto insurance is not just a good-to-have, but a necessity mandated by law in Ontario. This means that driving without a valid auto insurance policy could lead to severe penalties such as hefty fines, vehicle impoundment, or suspension of your driver’s license.
Mandatory Car Insurance Coverage in Ontario
Ontario has a “no-fault” car insurance system which means that regardless of who is at fault, you will deal with your own insurance company for your injuries and the damage to your vehicle.
If you drive in Ontario, you must have mandatory minimum insurance which includes the following coverages:
1. Third party liability
If you have an at-fault accident, you can be sued for injuring someone or for property damage. It will cover court-awarded settlements, legal fees, and out-of-court settlements up to the limit of your coverage. By law you must carry a minimum of $200,000 in Third-Party Liability coverage. Liability suits have been on the rise in Canada with the average award in excess of $1.5 million. To ensure that you are adequately protected, we recommend $2 million in coverage.
2. Accident Benefits
If you are injured in a car accident, there are basic accident benefits that are automatically included in your policy for medical costs over and above what OHIP provides, including a portion of lost income, medical rehabilitation, and attendant care.
3. Uninsured Automobile Coverage
Though basic auto insurance is mandatory in Ontario, there is still a very real possibility of getting into an accident with someone who does not have insurance or does not have enough coverage or flees the scene. This covers costs if the other driver is uninsured or under-insured.
4. Direct Compensation - Property Damage (DCPD) Coverage
If you are in an accident caused by someone else, this portion of your coverage pays to repair your vehicle, with no deductible. It will also provide you with a rental car while your vehicle is being repaired or replaced.
Optional Auto Insurance Coverage
While mandatory coverage forms the basis of any auto insurance policy, you can opt for additional protection through optional coverages. These typically include collision, comprehensive, and all perils coverage.
1. Collision Coverage
Protects you from costs to repair damage to your vehicle caused by impact with another vehicle or an object such as a guardrail.
2. Comprehensive Coverage
Comprehensive coverage, also known as parked car coverage, insures your vehicle against non-collision incidents. These might include theft, vandalism, fire, natural disasters, and more. This coverage pays for losses, other than those covered by Collision.
3. All Perils Coverage
All perils coverage is a blend of collision and comprehensive coverage, offering broad protection for your vehicle.
There are other optional coverages available as well, such as accident forgiveness, waiver of depreciation, and loss of use or rental vehicle coverage. Each of these provides specific protections and can be beneficial based on your unique circumstances.
Navigating the Insurance Market with Insurance Brokers
Navigating the auto insurance market can be daunting, given the plethora of options available. Here’s where insurance brokers like McLean & Dickey Insurance can step in to simplify the process. With our extensive experience in the field, our insurance brokers can guide you in creating an auto insurance plan that’s just right for you. We can help you understand the various coverage options, select the best ones for your needs, and even assist in negotiating a fair premium.
Conclusion
Auto insurance is a critical component of responsible vehicle ownership. Understanding the mandatory and optional coverages can help you make an informed decision and ensure you have the necessary protection in case of an accident.
