How Much Car Insurance Should You Have?
Although car insurance is required to drive in Canada, mandatory coverage minimums differ by province. These minimum requirements cause many drivers to believe this is appropriate coverage. Everyone’s insurance needs are individual to their own circumstances, and the minimum coverage doesn’t equal the average requirement. Since each province’s requirements encourage drivers to invest in little more than the minimum, the chances of financial losses is heightened.
What variety of insurance coverage should you have? How much is enough? Read on and we’ll take a closer look. Discover the integral issues that effect liability. The medical benefits, the effects of uninsured vehicles, and the other pieces that comprise a vanilla car insurance policy. Although I can’t personally prescribe the ideal amount of coverage for you, I plan to give you a better understanding of what to be aware of. You’ll learn key items to be aware of in preventing yourself from unnecessary financial losses.
Third-Party Liability Every policy has a component dedicated to third-party liability coverage. It reflects the amount of financial protection you have in the event you are declared responsible for injuring or killing another person, or damaging another person’s property. If a lawsuit is brought against you, this coverage will pay claims up to your maximum. Most provinces require a minimum of $200,000, but some require more. For example, Nova Scotia requires $500,000.
Statutory Accident Benefits This portion of your insurance policy covers expenses associated with any injuries sustained by you or your passengers during a traffic accident. It does not matter who caused the collision. Benefits cover medical expenses and rehab expenses. It also pays for a caregiver and replaces income that is lost as a result of your injuries. Again, minimum requirements vary by province. For example, Ontario requires $100,000 (outside “catastrophic” injuries) while Nunavut only requires $25,000.
Uninsured Vehicle Coverage In the event you are struck by an uninsured motorist, you have an ‘uninsured’ coverage feature to offset your damages. This feature covers the costs associated with you and your passengers. It is this coverage that is also applied in the circumstance that you are involved in a hit & run accident, where the other motorist speeds away.
DCPD (Direct Compensation Property Damage) Direct Compensation Property Damage is the benefit used to repair your car in the event you are involved in an accident in which you are held not found responsible for some of the ‘fault’. Your collision insurance coverage covers your fault, and DCPD covers someone else’s fault.
Identifying The Amount Of Coverage To Purchase Thus far, we’ve discussed the basic components of an auto insurance policy as mandated in most provinces (with the exception of Direct Compensation – Property Damage coverage). This discussion missed the larger context of need. Millions of people are exposed to a financial loss because they are buying the minimum amount required by their province’s law. A single court ruling could potentially devastate these people financially.
Suppose you live in Prince Edward Island and decide to invest in the $200,000 minimum 3rd-party liability requirement. As the result of unforeseen circumstances, you are found at-fault for an altercation that results in the demise of another driver. Suppose you are found responsible for $2,000,000 in damages. Your insurer is responsible for the first $200,000, so therefore you are left with a $1.8 Million dollar tab. This sequence of events would financially devastate the average consumer with the minimum required liability coverage.
In buying the minimum coverage requirement, millions of drivers are opening themselves up to some extreme risks. We get into accidents every day, and the cost of the average accident goes up every year with inflation. We need to be vigilant that we have necessary third-party liability, accident compensation, and uninsured vehicle compensation. Otherwise we open ourselves up to unnecessary risk, and potentially dangerous consequences.
It is wise to regularly shop for car insurance quotes. Comparison shopping can not only uncover the best rates but also the best values. You might discover that you can get more coverage for less money than you’re presently paying.
Have a close look at your coverage levels. Look into what it would cost to adjust your coverage to a level you feel more comfortable with. Online Canadian auto insurance quote websites often save precious time in your investigations. They can often reveal the car insurance brokers that are most interested in your business. Find the cheapest rates for the coverage you need, and compare this to your present insurer. You might discover that you’re paying less for your auto insurance at the end of the day.
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