Car Insurance Coverage: Everything You Need to Know
We break down the basics of car insurance in Ontario.
Types of car insurance coverage in Ontario
The first thing you should know about driving in Ontario is that basic car insurance coverage is mandatory for all Canadian drivers.
Basic car insurance includes protection from the cost of damages as a result of a collision. A basic car insurance package includes:
- Third-Party Liability Coverage – Money to pay for damages incurred by someone not involved in the incident, like if you drive through a restaurant window.
- Statutory Accident Benefits Coverage – Money to pay for your medical care if you’re injured in a collision.
- Direct Compensation – Money to repair your car if you were in a collision that wasn’t your fault.
- Uninsured Automobile Coverage – Money to cover your costs if another driver involved the incident doesn’t have car insurance coverage.
As you can see from what’s covered by basic car insurance, it protects you against situations that were either not your fault or out of your control.
But what about situations where you were fully or partially at fault? This is where optional coverage will come in handy. And when we say optional, what we really mean is “can’t recommend strongly enough.
What’s usually covered when I get car insurance?Most drivers in Ontario will add some (if not all) of the available options to their car insurance package. These options include:
Collision insuranceSimilar to Direct Compensation coverage in that it covers the cost of damages, collision insurance covers the percentage of damages that you are responsible to pay, based on what percentage of the incident is deemed your fault.
It also covers any damage sustained to your vehicle in a single car collision, like if you drive into a tree or signpost.
Collision insurance averages $500 to $700, but can be more expensive if you own a high-end vehicle. Keep in mind that you can always lower your collision insurance premiums by agreeing to pay a higher deductible.
Comprehensive car insurance
Comprehensive car insurance kicks in to cover the costs of non-collision-related damage to your vehicle. While the cause could be anything from a flying golf ball to an alien invasion, the most common situations covered by comprehensive car insurance are:
- Falling objects
- Flying debris
- Harsh weather
- Natural disasters
Comprehensive coverage costs around $100 to $300 per year on average.
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Third-party liability car insuranceYou have third-party liability as part of your basic mandatory package up to $200,000. But, depending on the kind of collision you’re in, where you have it, who’s in the other vehicle and who else got hurt (i.e., pedestrians, cyclists), you could blow through that $200K quickly on medical treatment, lost wages, funeral expenses, vehicle repairs, property damage and/or additional lawsuits.
For these reasons, it’s often recommended that drivers opt to increase their coverage to at least $1,000,000.
Uninsured motorist coverageThis is also part of your basic coverage (also with a default limit of $200,000), and probably won’t be enough coverage if damages are extensive.
To increase your limit, you’d add a family protection rider, which would match the limit on your liability insurance. This means that if you’ve opted for $1,000,000 or more of liability coverage, then you’ll have the same amount for your emergency funds.
Does my insurance cover me in another car?Yes and no.
Car insurance follows the car, not the driver. So if you get into a collision driving someone else’s car, their insurance will cover it as long as you:
• Have a valid driver’s licence
• Are driving with the vehicle owner’s permission
• Do not have a motor-vehicle-related criminal record
But if you don’t have insurance, and the owner of the car comes after you personally for damages related to a jump in their premiums, you’d have to cover that out of pocket. Those costs would fall under your car insurance coverage.
What is full coverage insurance?If you’re in a collision and the other person says they have full coverage, what does that mean? In Ontario, it doesn’t actually mean anything. No coverage is “full” because you always add more to your coverage if you want. What they probably mean is that they have more liability coverage.
The difference between liability and full coverage insuranceLiability coverage can actually be added to your policy, where as full coverage is how some people refer to their policy.
Once you’re properly insured, get out there and see every one of those 190,000 km of road.