25% of Canadians have never read their car insurance policies. They're worried about what coverage they'll receive and how much it will cost.
Reading over your policy is an important step. It keeps you from being blindsided during a traumatic event such as an accident, natural disaster, vandalism or theft. It also helps ensure you have the minimum required insurance coverage in your area and any add-ons you may require.
Read our guide to learn the mandatory and optional forms of car insurance coverage your policy may include.
Required Car Insurance Coverage
Almost all developed countries require a minimum amount of car insurance to keep drivers safe and pay for any medical bills or damages that occur after an accident. Minimum coverage limits require all Canadians to have at least:
- $200,000 in liability car insurance coverage for a single accident
- $10,000 for bodily injury and property damage claims
- Direct Compensation Property Damage or DCPD coverage
- $3,500 per person for minor injuries
- $65,000 per person for medical and attendant care for up to 5 years
- Up to $1 million for medical and attendant care for catastrophic injuries
- $6,000 in funeral expense benefits
- Disability income benefits for 70% of gross wages and a minimum of $185 per week for 104 weeks
- Non-earner benefits of $185 per week for 184 weeks
- Death benefits of $25,000 to the spouse, $10,000 for each surviving dependant, and $10,000 to parents or guardians
- Right to sue for pain, suffering, and/or economic loss
Refusing to get the minimum amount of coverage puts you and all other drivers at risk. It comes with severe penalties, including fines of:
- $2,500 in Alberta
- $300-$2,000 in British Columbia
- $5,000-$25,000 for your first offense and $10,00-$50,000 for further convictions plus $2,500 for taxes in Ontario
You're likely to face criminal convictions and can lose your license or car. In Ontario, you could have your licensees suspended for up to a year and your car impounded for up to 3 months.
Your insurance premiums will go up if you have an accident without insurance. You'll also raise the rates for every driver on the road.
Start with the minimum amounts when deciding how much car insurance coverage you need. After that, think of any extra coverage you may want to add.
Average Policy Coverage
Most legitimate insurance companies will offer the required legal levels of coverage, but they may also include more. The average policy includes uninsured and underinsured motorist, liability, statutory accident benefits, DCPD, PIP, and collision coverage.
Uninsured automobile coverage applies to any injuries from an accident caused by an insured driver. It also protects against damages to your vehicle if the uninsured driver is at fault. Underinsured motorist coverage applies when the other driver doesn't have enough insurance to cover damages.
Liability car insurance coverage applies when you're at fault for an accident. There are 2 types; bodily injury and property liability.
Statutory Accident Benefits Coverage adds to or replaces primary health insurance policies to cover medical costs after an accident. It's based on a percentage of your weekly income and applies for a year from the first day you miss work after the accident.
DCPD coverage is similar but applies when another insured driver is at fault for the accident. It covers the medical bills of anyone you may have injured.
Personal Injury Protection or PIP coverage applies to you and your passengers. It pays for medical bills after an accident and may also cover lost wages.
Collision coverage helps you repair your car after an accident. It may or may not cover major accidents or the cost of replacing a totalled car.
Optional Car Insurance Coverage
The minimum car insurance coverage requirements are only a baseline recommendation. They'll keep you legal, but they may not be enough to cover you in certain situations.
Additions you may want to add to your basic policy include perils, MBI, GAP, comprehensive, full, commercial, indexed, and rental coverage.
Perils Coverage
There are approximately 78,710 motor vehicle thefts reported to the Canadian police each year. It's a common crime with one car stolen every 7 minutes. This doesn't even include car break-ins.
Drivers may assume that the increase in this specific type of crime means it's automatically part of their car insurance coverage, but that isn't true. Many standard policies don't include theft coverage.
You may need to get some form of perils coverage. They expand your policy so that it applies to more than just accidents.
All Perils Coverage includes comprehensive and collision/upset coverage. It covers damages to objects attached to your car such as trailers. It also covers theft, regardless of whether the thief is a stranger, family member, or employee.
Add-On Specified Peril Coverage is a more affordable, specified policy that only covers theft or attempted theft. It's best if you want to protect a specific item in your car, such as your beloved stereo system or a family heirloom you travel with.
Not all items are covered in these policies, but your home insurance may help cover additional damages.
MBI and GAP Coverage
Another element that many standard insurance policies don't cover is mechanical repairs, breakdowns, and maintenance. You may need to find separate coverage for these events. Two of the most common types are MBI and GAP coverage.
MBI or mechanical breakdown insurance, also known as car repair insurance, helps when parts of your vehicle malfunction. It comes in several different levels.
Basic MBI coverage applies to your vehicle's engine parts, transmission, exhaust, brakes, drivetrain, and electrical components. You can add on coverage for other parts such as steering components, the fuel system, and air conditioning.
MBI deductibles range from $25-$400. Most policies exclude routine maintenance.
Your car must meet certain conditions to be eligible for an MBI policy. It must be low value, less than 15 months old, and have less than 15,000kms to apply for this coverage.
MBI coverage usually only applies for 7 years or 100,000 miles. Cars made before 1990 needed major mechanical repairs during this time period, but modern cars last much longer, which may make MBI insurance unnecessary.
GAP or Guaranteed Auto Protection coverage is a limited-time warranty with a contract. It comes in several types for specific incidents.
GAP coverage, like most forms of insurance, comes with exclusions. It may not cover regular maintenance, wear and tear, exterior or interior damage, damage from improper care, environmental factors, or accidents.
There is no type of insurance policy that includes coverage for routine maintenance such as oil changes and tire rotations. These common fixes rarely add up to a large bill, but the best way to keep costs low is to take care of your car.
Comprehensive Policies
A comprehensive policy pays for damage caused by incidents other than accidents. It may include insurance coverage for:
- Towing and rentals
- Non-driving and non-collision related damages such as animal collisions, inclement weather, and natural disasters
- Theft
- Vandalism
This is a useful type of coverage that combines several optional forms of insurance into one policy.
Full Coverage
Full coverage car insurance policies combine collision and comprehensive coverage. They may be required when leasing or financing a car.
These policies are one of the most complete types on the market and can also be some of the most expensive. You may not need them, but if you do, they'll serve as a wide safety net over your vehicle, covering a range of different types of damage.
Even a comprehensive or full coverage policy may leave you without the specific type of coverage that you need. You may have to add accident forgiveness, commercial auto insurance, indexation, or rental car insurance.
Accident forgiveness ensures that your car insurance premiums stay the same when you have your first at-fault accident. It may not last a long time but is a perfect form of additional coverage for new drivers.
If you drive a car for work, you or your employer will need a commercial auto insurance policy to cover it. It's worth the extra cost to ensure that you can pay for any damage or medical bills.
Indexation adjusts your insurance benefits every year according to the current inflation rate. Adding it to your car insurance policy ensures you always have enough coverage.
Rental car insurance coverage helps pay for the cost of rental cars. It may have limits that determine how much can be paid per day.
Knowing what type of coverage your policy includes is important because it allows you to have confidence on the road. It keeps you and all drivers you encounter safe from massive medical or repair bills.
Where to Find the Lowest Full Coverage Car Insurance
Many insured drivers don't know what their policies cover. They may face massive unforeseen bills after an accident, natural disaster, vandalism or theft.
There are 2 main ways to ensure you have the right amount of car insurance coverage. First, consider what you need to meet legal requirements and cover the costs of any unforeseen events. Next, check that your policy has all the coverage you require.
Insurdinary is a trustworthy Canadian insurance company that can help you protect everything that's important to you. Get a quote for our car insurance coverage today.
