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What Type of Auto Insurance Do You Actually Need

It is the law in Canada that everyone who drives a vehicle must have car insurance. However, the age-old questions about automobile insurance—what type of car insurance do I need or whether it’s best to go with the lowest-priced option are always here and as a prospective car insurance buyer, you need to have proper answers to these two matters. 

Well, saving money shouldn’t be the only reason why you tend to acquire a specific vehicle insurance policy. In fact, you need coverage that genuinely protects you from the financial ruin caused by car accidents.

For instance, you have 11 opportunities to flunk your driver’s test before getting your license, but there aren’t many second chances when it comes to vehicle insurance. Either you’re covered or you’re not. One of the main reasons it’s difficult to find the correct coverage is that let’s face it, automobile insurance is complicated. For that reason, it’s important to know exactly what you need.

Given this, the first few questions that most drivers have are: What kind of auto insurance do I require? And why do I actually require insurance? Both of these queries have the same answer: it depends.

Why Do You Need Auto Insurance?

Driving without auto insurance is not only irresponsible, but it is also unlawful. Despite this, one out of every eight Canadians drives without auto insurance. However, if you’re found driving without auto insurance, there are harsh repercussions. If you’re the type who likes to break rules, this isn’t the rule for you.

Another reason to purchase automobile insurance is to safeguard your funds and property. The appropriate quantity of automobile insurance might save you a lot of money. And it’s not that pricey in the broad scheme of things. 

However, you need to find a reputable car insurance company that offers the best services. For instance, if you’re based in Ontario, Canada, it’s best to do your research and find the best Ontario car insurance company in the area. Another great idea would be to work with an experienced broker.

Types of Auto Insurance

It’s usually a good idea to start with a basic understanding of vehicle insurance coverage. Third-party liability, comprehensive, and collision coverage are the three levels of coverage.

Third-Party Liability Insurance

Consider third-party liability coverage to be the most basic form of automobile insurance. Third-party liability insurance is required in Canada to prevent you from having to pay for any harm you cause to someone else’s property or person. Your third-party liability coverage kicks in if someone is killed or wounded as a result of an at-fault collision caused by you.

Collision Insurance

Collision coverage and third-party liability coverage protect you if you collide with another object or vehicle such as a guardrail or a concrete parking lot surface. If you own your car outright, collision coverage is optional, but it is required if you finance or lease it. It’s normally recommended that you don’t buy collision insurance if the deductible is more than the worth of your vehicle.

Comprehensive Insurance

This is the most comprehensive sort of car insurance available. Comprehensive or full coverage auto insurance protects you against things like hail, theft, and flooding that might cause damage to your vehicle while it’s parked.

Every time you increase your insurance coverage level, your monthly premiums will increase. It’s also worth noting that the minimum level of car insurance coverage necessary varies from province to province. If you’ve recently relocated to a new province, check with your insurance carrier to see if you need to expand your coverage or if you may lower it to save money.

Although comprehensive coverage is recommended, consumer reports advise against it if your annual premium equals or exceeds 10% of your vehicle’s cash value.

Considering Add-Ons

You may wish to consider more than the suggested level of auto insurance coverage depending on where you reside or your personal circumstances. Additional coverage, sometimes known as “endorsements,” can be purchased to protect you from risks not covered by your base insurance.

You might wish to consider a rental car endorsement if you rely extensively on your vehicle and do not have another method of transportation. An accident forgiveness waiver, which relieves you of any premium increases if you’re involved in your first at-fault collision, is another option to explore.

Final Thoughts

Car insurance, like so many other things in life, is a complicated issue. Because of the potential costs involved, most people don’t really want to think about it too deeply. But if you need to file a claim and your policy is lacking in coverage, it’s going to cost you more than money in the long run.

Just make sure that you’re familiar with all of the options available to you before selecting a policy and be sure that it suits your overall financial situation.

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