ALL ABOUT AUTO INSURANCE IN CANADA

Do I really need auto insurance?

Regardless of where you live in Canada, auto insurance is required

Driving without insurance is a very serious offence with harsh

penalties including a heavy fine and/or licence suspension. You

cannot obtain a vehicle registration unless you first provide proof

of insurance.

Buying auto insurance

Whenever you get behind the wheel of a car, it is possible that you may

cause damage to other people’s property or injure – or even kill – yourself,

other drivers, passengers or pedestrians. If you were to drive your car without

insurance, not only would you be breaking the law, but you would also be

risking your savings, home and other assets.

Who is insured?

Auto insurance covers the driver, occupants and potentially any pedestrians

involved in a collision with the vehicle. The main user of the vehicle is

referred to as the principal driver and any other listed drivers are referred

to as occasional or additional drivers. Coverage may also be provided for

damage to the vehicle.

If you are borrowing a car

• The person whose car you are borrowing must give you permission to use it.
• The use of the car cannot be part of a routine or regular pattern, such as driving to school every day. If you regularly borrow the same car as part of a routine, you must be listed on the owner’s insurance policy as an additional driver.

If you are lending a car

• You must consent to its use by the other driver.
• The person borrowing your car cannot be using it as part of a regular routine. If so, you must have the person listed as an occasional driver on your insurance policy.
• The person borrowing your car must be a licensed driver.

your car, it goes on your insurance record. When you lend your car, you are

also lending your driving record

Who can sell you insurance?

• Insurance brokers deal with a number of companies and try to find you

the most appropriate coverage.

• Insurance agents usually sell insurance for a single company.

Do you qualify for discounts?

Before you decide on an insurer, shop around to compare prices, coverage

options and quality of service. Some insurance companies may offer some of

the following discounts for:

• Cars with loss-prevention devices

• Drivers who have graduated from an approved driver-training course

• Two or more private passenger cars insured within the same household

• Combined coverage for existing insured clients – for example, if you

choose to insure both your car and your home with the same insurer

• Drivers who have never filed an insurance claim (“claims free”)

• Mature drivers over the age of 55

• Cars not used in winter

• “Loyalty” for policy renewals by existing insured clients, subject to

insurer’s criteria

Coverage

Mandatory insurance

Basic car insurance varies from province to province but includes two types

of mandatory coverage:

• ACCIDENT BENEFITS
• THIRD-PARTY LIABILITY

Accident benefits coverage pays for medical treatment, income

replacement and other benefits to help you recover if you are injured in

a collision. This coverage also provides funeral expenses and payments

to your survivors if you are killed in a collision. These benefits may also be

referred to as “no-fault benefits,” which means they are paid to you by your

insurer regardless of who caused the collision. Accident benefits coverage is

mandatory in every province except Newfoundland and Labrador. In some

parts of the country, this coverage is referred to as “Section B” benefits.

Most people don’t have the money to pay for the losses they might cause

while driving, so provincial governments require drivers to carry a certain

amount of third-party liability coverage for any losses they might cause

others to suffer. In most provinces, the person who did not cause the collision

has the right to sue the at-fault driver in certain circumstances for additional

costs and damages not covered by accident benefits.

the balance of the settlement would be paid out of your pocket. Minimum

coverage requirements vary from province to province. Be sure to contact

your insurance representative for detailed information about the minimum

coverage for your province.

Are minimum coverage requirements enough?

The minimum mandatory coverage for the operation of an automobile in

most provinces is $200,000 minimum third-party liability coverage. If you are

held responsible for a collision causing bodily injury to others, the minimum

third-party liability coverage may not be adequate. You would then be

personally responsible for any damages awarded over that amount.

Depending on what coverage you select, your policy may include the

following:

following a collision with another car or an object such as a tree, animal,

guardrail or pothole. In some parts of the country, this coverage is referred

to as “Section C” benefits.

resulting from miscellaneous causes including fire, theft, windstorm,

hail, rising water, malicious mischief, riot or civil commotion, explosion,

earthquake, falling or flying objects, vandalism, etc. but normally not

including loss by collision or upset.

Endorsements (optional insurance)

You may purchase optional insurance, known as “endorsements,” including

these types of coverage:

(such as taxi or train fares) while your car is being repaired.

collision and comprehensive coverage, which is particularly useful for

drivers who frequently rent cars in Canada and the United States.

what you paid for your car – without depreciation – and is specifically

designed for new cars.

you already have this coverage with an independent company through

your credit card or car association).

from the actions of an at-fault, under-insured driver (if you are travelling

in a province where the mandatory liability coverage is low, this coverage

ensures that you and your family are covered to your own policy’s limits

regardless of the other person’s coverage levels).

increasing in the event of your first at-fault collision.

What is not covered?

Your automobile insurance covers the driver, the passengers and anyone else

involved in a collision involving your car and depending on your policy, the

car itself. Typically, any briefcases, purses, sporting equipment (e.g., golf clubs),

smartphones or other items that may be stolen from your car or damaged in

a collision may be covered by your home, condominium or tenant insurance.

Your standard home, condominium or tenant insurance policy may or may not

cover items related to your home-based business (e.g., products or equipment)

if they are stolen from or damaged in your car. Check with your insurance

representative regarding specific coverage for the contents of your car.

Canadian Loss Experience Automobile Rating (CLEAR)

average size and frequency of insurance claims for most makes and models

of cars. Most insurance companies use CLEAR to rate vehicles based on their

safety record and the cost to repair or replace them, and then offer lower

premiums to drivers who buy cars with better ratings. For example, some

vehicles may be more susceptible to theft than others; some may be better

designed and less likely to sustain serious damage; some are less expensive

to repair; and some protect their occupants in collisions better than others.

Before buying your car, be sure to check how different types of cars are rated.

It could save you money when you seek insurance. For additional information

on car ratings, contact your insurance representative. Don’t forget to look for

the fact sheet “How Cars Measure Up” at www.ibc.ca

Settlement terms and conditions

REPAIR OR REPLACE

If you have collision coverage, your insurance representative will pay for

the repair or actual pre-collision cash value of your car (including original

equipment but not contents.) You are responsible for the deductible.

Whether your car is repaired or rebuilt, it should be in the same condition it

was in before it was damaged.

Your insurance representative is only responsible for paying for your car to

be restored to its condition prior to sustaining damage. For example, if a

rusty door panel that was dented in a collision were to be replaced with one

that is not rusty, you may be expected to contribute financially toward the

“betterment” of your car.

In the event that the estimated cost to repair your car exceeds its cash value

prior to being damaged, your insurance representative may decide to treat

the car as a write-off rather than repair it. You would receive the actual cash

value of your car, minus your deductible, and your insurer would keep the

salvage (damaged vehicle or parts).

In repairing your car, used or reconditioned parts may be used as long as they

are of the same kind and quality as the originals and do not adversely affect

the operation or safety of your car.

If your car is in its first production year, there likely will be original equipment

manufacturer (OEM) parts available to repair. These parts are new. New parts

may also include “after-market” replacement parts, which can be an overrun

from makers of original parts or made by manufacturers who specialize

in replacement car parts. After-market parts approved by the Certified

Automotive Parts Association meet or exceed OEM specifications and are

suitable replacement parts. Safety-related replacement parts are usually new.

Your premium

A number of factors help determine your car insurance premium:

If you live in a urban area, collisions and auto theft are more likely, which

may translate into higher premiums.

Your car’s make, model, year, value and potential repair costs are

associated with risk factors. For example, some cars fare better than

others in collisions, resulting in fewer injuries and minimal car damage.

In determining your car’s risk and expected claim severity, your insurance

company may look to the CLEAR system of rating vehicles (see page 9).

Generally, the more you drive your car, the higher the collision risk. Higher

premiums may result if you drive your car often or drive long distances.

It is very important to consider how you use your car to ensure you have

the right insurance coverage. For example, if you regularly commute to

work, carpool, drive often to the United States or are the designated driver

for taking children to team practices, you should disclose these activities

to your insurance representative.

A long driving history with no collisions can help keep your premiums

down while collisions where you are at fault may increase your premiums.

Speeding tickets and other moving violations may also increase

premiums. Parking tickets do not affect premiums.

Depending on what province you live in, your insurer may consider the

claims history of the group to which you belong as a driver – for example,

the group of drivers of the same age and driving experience. If you belong

to a group that is more likely to make claims, your premiums may be

higher.

The more comprehensive your coverage, the higher your premium may be.

OTHER FACTORS:

In the highly competitive field of insurance, prices are also affected by the

interplay of market forces, government regulations, and taxes at all levels.

It is important to note that there is no one-size-fits-all method used to

determine premiums – not all 30-year-olds living in urban areas and driving

Fords pay the same premium.

These factors do not affect your car insurance premium:

Contrary to popular belief, the colour of your car does not affect

your premium. You will not be asked the colour in your car insurance

application.

Premiums are not necessarily higher for foreign cars than domestic ones.

What is a deductible?

The deductible is the amount you will pay in the event of a claim. Most

insurance claims are subject to a deductible. While a higher deductible will

decrease your premium, it also results in higher financial risk. Choose your

deductible based on your financial ability to assume this amount in the event

of a claim. Speak with your insurance representative regarding how your

policy deductible would be applied.

Things that may reduce your premium

• Depending on the province you live in (some have a single government�run insurance company), start by getting a quote with the insurance

company that insures your residence. Companies often offer discounts

when you “bundle” your home and car insurance together.

• If you live in a province without a government-run insurance company,

be sure to shop around and obtain quotes from a variety of insurance

agents or brokers. Ask about discounts or promotions. When comparing

quotes and coverage, don’t forget service! Good service may cost a bit

more but is well worth it.

• Consider opting for higher deductibles for claims relating to your car.

The higher your deductible (or the more you pay in the event of a

claim), the less your premium will be.

• Reduce annual kilometres driven and take public transit to work,

if available.

• Exclude high-risk drivers from your policy so you are not penalized with

a higher premium.

• Ensure your insurance representative has an accurate vehicle

identification number (VIN) on record. The VIN is your car’s identity,

which is used to confirm the kind of car you are driving.

• Install an approved theft-deterrent system in your car.

• Consider dropping collision coverage on an older car as even minor

damage could cost more to repair than the car is worth.

• Buy a car with a lower-cost insurance rating. Some models, such as

four-door sedans, are less popular with thieves.

• Drive carefully to build a consistent collision-free and conviction-free

driving record.

Renewing your policy

Your insurance representative will send you a notice of renewal prior to the

policy expiration date. Depending on what province you live in, renewal may

or may not be automatic unless you or your insurance representative gives

notice to the contrary. An insurance policy is a legal contract so be sure you

know what you are signing. Speak to your insurance representative about the

exact specifications of your policy.

Settling a claim

We hope you never have a collision but if it happens, there are certain steps

you must take:

• Depending on the nature of the collision or the extent of the injuries, contact the relevant authorities. If your car has been stolen or damaged from a hit and run, file a report at the nearest police station.
• If needed, complete a joint report in the case of a collision with no injury. This allows the drivers to identify themselves and quickly report the collision to their respective insurers. Be sure to collect the other driver’s name, address, phone number, driver’s licence number and registration certificate, and insurance information. Record collision details – how, when, where it happened, time, date, location, speed, and weather and road conditions. Take photos if you can do so safely.
• Call your insurance representative as soon as possible. Describe the circumstances of the collision as best you can. Keep supporting documents – joint reports, photos, police report number, towing bills, etc. Your insurer may ask you to complete a written declaration (“proof of loss”) within 90 days of the collision.
• Assessing your responsibility in the case of a collision will fall upon your insurance representative who will let you know what the next steps are to have the damage evaluated and repaired or the car written off.
• If your car is stolen, you will only be compensated if you purchased specified perils, comprehensive or all perils coverage.
• A claims specialist or adjuster will contact you to examine the damage to your car. You must come to an agreement regarding the settlement amount. Your insurer will also determine the repair or replacement terms and conditions for your car, depending on your policy coverage.