Alongside the coverage you have to carry are a number of elective coverage options that will protect you in situations where basic car insurance won’t. With so many types of auto insurance and optional add-ons, you may still be wondering what that really means.
In this piece, you’ll read about what your basic car insurance policy covers, what different non-essential car insurance types can do for you, and what you need to get driving.
Basic car insurance
The first thing to know about car insurance: a basic policy has what you need to legally drive. In Ontario, this includes:
- Third-Party Liability coverage
- Statutory Accident Benefits coverage
- Uninsured Automobile coverage
As of January 1, 2024, Ontarians are able to opt out of Direct Compensation — Property Damage (DCPD) coverage by filling out the Ontario Policy Change Form (OPCF) 49.
This package protects you from a wide range of damage-related expenses that could result from a car accident. Incidentally, these kinds of claims have the highest payouts after an accident since they compensate you for any injuries you may have suffered that aren’t covered by your Ontario health insurance plan. Qualifying situations include:
- Medical expenses
- Rehab expenses
- Attendant care
- Lost income
- Lost education
- Funeral expenses
And depending on your level of fault, it could help you pay for injuries or damages you’re liable for or compensate you for your own car repairs.
How does basic car insurance work?
If you get into a car accident, you’ll most likely have to prepare for an insurance claim. This involves gathering insurance information from everyone directly involved, taking pictures of the cars and the scene and jotting down everything you can remember about what happened.
**Note: Car insurance coverage requires you to report any incident within seven days if it caused injury or property damage.
When you file a claim, your insurer will make a “fault determination.” Everyone involved in the accident (you included) will be assigned anywhere from 0% to 100% fault for the incident, depending on the circumstances: maybe one person was speeding, while another was on their phone while you were forgetting to check your blind spot.
The more fault you’re assigned, the more your policy will pay to cover injuries or property damage. The more others are at fault, the more you can receive as compensation.
**Note: Personal fault above 25% is likely to raise your premium, but if you think your insurer missed something, you can dispute their fault determination.
What does basic car insurance cost?
In Ontario, auto insurance costs around $1,500 per year on average, but is dependent on a variety of factors including:
- Your age
- Your gender
- Your location
- Your car model
- Your yearly mileage
- Other regular drivers
- Your own driving record
- Past claims and claim types
Your premium may also be higher if you add “endorsements” or “riders.” These tailor your policy to your needs.
Common endorsements can extend coverage to rentals, pay for a replacement vehicle during repairs, or stop your premium from rising after your first at-fault collision.
Optional auto insurance coverage
This will pay to repair or replace your car in the event you collide with another car or object. While you may already have something similar — Direct Compensation - Property Damage (DCPD) Coverage — as part of your car insurance coverage, it’s not exactly the same and the difference is important.
If you’re in a car-on-car collision and it’s determined the other driver was 100% at fault, your DCPD insurance will pay for the damage to your vehicle. But if you were more than 25% at fault, DCPD will cover the cost of some damages, but not the 25% portion that you were at fault for. By opting into collision coverage and having DCPD, you can rest easy knowing the repair cost of any accident will be covered, regardless of how much fault is assigned to you.
Collision insurance is also helpful in single-driver cases. If you accidentally drive into a tree or a signpost, DCPD will not apply and it will fall on your collision insurance to cover the costs — as long as you have it.
Is collision insurance worth it?
This will depend on you and the car you drive.
For example, if you lease or finance your car, then collision insurance was likely a requirement of your contract.
If you own the vehicle outright, the decision will come down to whether you’re willing to pay the full replacement cost if it got totalled. This would probably be an emphatic “no,” if you had a brand-new car. But if your car’s getting old and you’re already looking for a replacement, then collision insurance may be draining what you could put towards your next ride.
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.