Everyone needs insurance on the vehicle they drive, in part because it is required by law. If you’re new to Canada, you might be wondering if vehicle coverage in this country is similar to coverage in other places. In a lot of ways, car insurance in Canada is very similar to insurance anywhere else. Insurance can sound complex at times, but it doesn’t have to be that way because all you really need to know are the basics.
Below are five things that you need to know about Canadian vehicle insurance and what it’s all about.
1. Liability Insurance
Liability insurance is insurance that covers the other driver should you get into an accident that is your fault and that person’s vehicle is damaged. If you have liability only, it won’t pay for your own vehicle, but it covers the other driver so that you won’t have to pay those expenses out of your own pocket.
2. Accident Benefits/Bodily Injury
This coverage is important because it covers both medical expenses and even loss of income if you’re in an accident and your life is temporarily interrupted. If you are unable to work and you have medical bills that have resulted from your accident, this type of car insurance will cover those things. Both liability and accident benefits/bodily injury insurance are considered mandatory in Canada.
Collision insurance covers damages to your vehicle whenever you get into a car accident. Even if your car is pretty banged up, the collision insurance coverage will take care of the repairs so that before you know it, you’re driving your car again as if nothing ever happened to it.
Comprehensive insurance covers things such as theft, vandalism, and damages to your windshield. These are things that other types of insurance don’t usually cover but that is often needed when you own a vehicle, so this type of coverage is important. Both collision and comprehensive insurance are considered additional coverage and are not required.
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5. Optional Coverage
The optional car insurance coverage pays for things that you’ll likely only need occasionally, but it’s coverage that you might want to think about getting anyway. Optional coverage includes:
- Car rentals. When your car is being repaired, it can be very convenient to rent another vehicle so that you’ll have something to drive until your own car comes back. Optional insurance coverage can help make that happen.
- Emergency roadside assistance. If you find yourself stranded on the side of the road, this type of insurance will pay for someone to come out and help you get back on the road again.
- Damages to a rental car. Accidents can happen even if you drive a rental car, and without this type of coverage, you may have to pay for damages to a rental car yourself.
- Depreciation. Depreciation means your vehicle will lose its value over time. Depreciation coverage helps mitigate that so that your car is worth a little more when you go to sell it.
- Collision forgiveness. With collision forgiveness insurance, your insurance rates won’t go up just because you have an accident.
Optional coverages are not mandatory but are highly recommended since you never know when you’ll need them.