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Know Your Rights: Auto Insurance

Understanding Auto Insurance

If you drive a vehicle, you have auto insurance. Unfortunately, despite the fact that auto insurance is such a big part of everyday life, not to mention required to drive, not many people are aware of their rights when it comes to this insurance.

Here is some information that you’ll want to know about auto insurance.

Auto Insurance is Required by Law in Canada

Each province in Canada requires that drivers have auto insurance. However, the only mandatory type of insurance is liability insurance. This is insurance that is designed to protect others from any damage that may occur by a driver operating a vehicle.

In Canada, liability insurance also includes coverage that protects drivers against financial losses due to medical expenses and loss of income due to injury.

It’s important to note that it’s not only the driver who is responsible if there is a collision, but also the owner of the vehicle. This means that vehicle owners will need to be certain that they only allow licensed and competent drivers to operate their vehicles.

The minimum amounts of insurance required will vary by province.

Collision Coverage is Not Required

Collision coverage is insurance that provides financial compensation for vehicle damages that occur as a result of a motor vehicle accident or collision. The cost of this insurance depends on the driver, the type of vehicle, and many other factors. This insurance is not required, but many drivers prefer to have this coverage.

Penalties for Driving Without Insurance

Penalties for driving without required insurance vary from province-to-province. For example, in Ontario, the penalty for driving without valid auto insurance varies between $5,000 and $50,000. In addition, you can have your driver’s license suspended or your vehicle impounded if you are caught driving without valid insurance.

Furthermore, if you are found to be at fault in an accident that causes injury or death, you could be held personally responsible if you do not have insurance. This means you could end up having to pay the person’s medical expenses and other costs.

Some Provinces Offer Public Insurance Plans

Public auto insurance is offered in British Columbia, Manitoba, Quebec, and Saskatchewan. Each province uses different insurance models. Drivers in these provinces also have the option of purchasing additional private insurance to enhance the coverage provided by public insurance.

In all other provinces, insurance must be purchased from a private insurance company.

High Risk Drivers

Drivers who are considered “high risk,” such as drivers who have a history of accidents or collisions, or those drivers who have had their policies cancelled due to unpaid premiums, may be refused insurance by an individual private insurance company.

However, since holding auto insurance in mandatory, there are options for high risk drivers, such as specialized insurance companies that are designed for this purpose. There is also an association known as the Facility Association that makes insurance available to those who are otherwise unable to get insured. This association operates in provinces that do not offer public insurance to make sure that everyone can get the required coverage. This association does not offer insurance itself, but it works with specific insurance companies.

Buying Auto Insurance

Depending on your province, you may be able to purchase third-party auto insurance from:

  • An insurance broker
    • Brokers sell insurance on behalf of different insurance companies and will give you the best rate from these companies. However, they do not represent every company. You have the right to ask your broker to provide you with the names of the companies they represent.
  • An insurance agent
    • This is a person who typically only represents one insurance company
  • Directly from an insurance company
    • You may be able to buy insurance right from the company itself.

Insurance may only be sold by a licensed agent, company, or broker.

Auto insurance companies, agents, and brokers are prohibited from requiring that you consent to a credit check before providing an insurance quote.

What You Need to Know About Auto Insurance

If you have private auto insurance, it’s important to know that not all insurance companies are the same. This means that premium costs will vary between companies and level of insurance will vary as well.

This is why many people find it important to shop around. You may find drastically different costs if you contact a number of different auto insurers. However, it’s important that you compare the level of insurance as well. One insurer may offer a lower cost, for example, but it also may not have the same type of coverage.

There are some aspects of basic auto insurance polices that are standardized, but it’s still important to read the terms of each policy when shopping for insurance.