Canadian law requires that every Canadian who is a vehicle owner must be covered by car insurance in order to drive their vehicle. If you are caught driving a vehicle that is not insured, your driving license could be suspended.
You could also be subject to having your vehicle taken away and paying a significant penalty. In fact, if you live in Ontario, you should know that driving a vehicle without insurance is illegal. Vehicle owners, lessees, or drivers without valid car insurance face penalties ranging from $5,000 to $50,000.
Besides these penalties, drivers may also be subject to higher insurance premiums which could lead to costly long-term consequences.
Read on to find out everything you need to know about car insurance in Canada.
Car insurance is comparable with home insurance, except you are getting insurance coverage for your car instead of your house. You will be charged premiums based on the annual cost of insurance that covers your vehicle. You will also need to make monthly or annual payments to your insurance company in return for taking on the risk of your car.
After assembling all premiums from drivers, your car insurance provider will place them in a single pool. The insurance provider then uses that pool to cover the losses of those who file claims throughout the year.
Your contract with your insurance company will usually list the losses that you are covered for. To ensure that you fully understand your coverage, make sure to read your contract before you sign up.
Canada’s minimum car insurance requirement varies from one territory to the next. It is important to be familiar with local regulations in order to ensure compliance. For more information, you should seek advice from car insurance brokers to help you find the best policy for you.
In the meantime, here are the three different types of car insurance available in Canada.F
Third-party liability coverage is the most common type of car insurance in Canada and is mandatory. It protects you from having to pay any damages to another policyholder’s vehicle. It also covers you in the event that someone is hurt by an accident caused by you.
Collision coverage covers you from third-party liability as well as from being flung into other vehicles. If you are involved in an accident with another driver without insurance, this coverage will cover you.
Comprehensive coverage is the best and most comprehensive of all the coverages, but it can also be the most costly. It covers most of the medical and accident-related damages, but it also covers flooding and theft.
There are many factors that Canadian car insurance providers use to base their premiums. These include:
- Your vehicle’s brand, model, and production year
- Your place of residence
- Driving history
- Demerit points
- Age and gender
For example, people who live in certain areas that have a history of multiple insurance claims might have to pay a higher premium. This includes neighborhoods that have many collisions and burglaries.
You will be able to get lower premiums if you don’t have a lot of speeding tickets, and you’re a responsible driver. However, you should expect to pay more if there are multiple speeding tickets and if you’ve been in an accident.
As for demerit points, your car insurance premiums won’t be affected by them as much except when your policy expires and your insurance company conducts a background check.
Another factor that can also affect your car insurance cost is your age and gender. Depending on which Canadian province you live in, women pay less in vehicle insurance premiums than men because men are known for engaging in unsafe driving behavior. However, premiums will be lower if you are older, regardless of your gender.
It is important to know how much coverage you require and which coverages you should consider adding to your policy. Even though every province has a minimum requirement, it isn’t always enough.
There are many options for vehicle insurance coverage, so it is important to research before you buy a policy. Compare quotes from different providers to find the best car insurance for your needs.
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