• Auto Insurance

What Type of Auto Insurance is Right for Me?

Avatar By: Wheels August 9, 2021

While some auto insurance is mandatory, you don’t need to get everything to start driving. That said, some policies come highly recommended since they can protect you, and others if you’re ever in an accident.

The question is, what type of auto insurance is right for me?

“Every Canadian is required to carry basic auto insurance on their vehicles,” says Justin Thouin, co-founder at LowestRates.ca, an auto insurance comparison website.

Auto Insurance

“In most provinces and territories, there is a mandatory minimum of $200,000 in third-party liability insurance, which covers you if you hurt or kill someone else in an accident, or cause property damage to their vehicle.”

Basic accident benefits are also mandatory across the country. They’ll cover medical costs for you or others that go beyond your provincial health insurance. Accident benefits cover more than just hospital stays. They also include physiotherapy, at-home services, and even dental care.

Since each province and territory has its own regulations and rules governing car insurance, it’s essential to check what the minimum mandatory requirements are where you live. It’s also worth noting that if you already have auto insurance, your current insurance provider may not be able to give you continued coverage when you move. Always double-check your policies before you move.

“Although it’s not mandatory, it’s worthwhile to consider increasing your third-party liability and accident benefits for additional coverage,” says Thouin. “Depending on where you live and your personal situation, you may want to look at optional insurance.”

Optional auto insurance policies to consider include:

  • Collision and/or comprehensive coverage, if not already mandated where you live, will cover costs of damage to your own vehicle.
  • Waiver of depreciation protects you from your insurance company’s ability to deduct depreciation from the value of your vehicle.
  • Loss of use covers the cost of a rental car or transportation expenses while your vehicle is unavailable.
  • Rental car or legal liability for non-owned vehicles protects you if you’re involved in an accident in a car you don’t own.

When choosing policies, you’ll need to think about what would happen if you have an at-fault claim. You’ll also want to evaluate your own driving habits and consider the kinds of claims that may affect your ability to renew your insurance in the future.

Auto Insurance

Some insurance providers are also now offering pay-as-you-go auto insurance that has seen increased interest in the last year. Using software called Telematics, pay-as-you-go insurance monitors how far you drive, so it’s ideal for people who have a vehicle that’s purely for recreational reasons. For example, a driver could purchase a policy that covers every 1,000 kilometres driven. When you start getting near your limit, you’ll be sent an alert.

“Usage-based insurance (UBI) monitors your driving habits, such as braking or speeding, and rewards drivers with discounts based on good behaviour,” says Thouin. “This is great for experienced drivers with established good driving habits, and some could see savings up to 30 per cent on their premiums.”

Telematics is available in Ontario, Quebec, New Brunswick, Nova Scotia, Alberta, and Prince Edward Island. Currently, there are fewer than a dozen insurance providers who offer it in Canada, but that’s expected to grow.

Besides the types of insurance, you’ll also want to understand how insurance rates are calculated. Not surprisingly, it’s your personal details that have the most significant impact on your rates.

Insurance providers want to know about your driving history. They want to see if you have any tickets, if you’ve been in accidents, or if you’ve ever had your licences suspended. They’ll even look at your age, where you live, the vehicles you drive, and your payment history.

It all comes down to risk for the insurance companies, said Thouin. The older you are, the more information the insurance companies have to go on in terms of classifying their risk in insuring you.

Regardless of what your insurance needs are, it pays to shop around. Insurance companies frequently change their pricing, so the company that offered the lowest rate last year may not be as competitive now.