Car insurance is tightly controlled by the government in Ontario. As a result, there is minimum coverage that all car insurance policies must cover. This is a requirement needed in all provinces in Canada. In Ontario, optional coverage is purchased to extend minimum coverage as well as to protect a vehicle against loss. The Financial Services Commission of Ontario provides a comprehensive guide to understanding car insurance.
There are several things that Ontario law requires car insurers to provide. Every driver must obtain coverage for at least $200,000 in third-party liability insurance. This amount covers injury to other people and property involved in an accident against an at fault driver. This is mandatory coverage that is usually extended. Most drivers opt for $1 million in liability coverage.
Accident Benefits Coverage
Protects the driver and other occupants of the vehicle, and is provided by the driver’s own insurance, regardless of who caused the accident.
Direct payment-property damage coverage
Another obligatory coverage. This pays for damage to your vehicle and valuables in the vehicle no matter where the accident takes place or who is responsible.
Uninsured motorist coverage
Provides coverage in accidents with uninsured drivers. This pays out if you are in an accident where you are not at fault and the other driver is found to be without insurance, or in the case of a hit-and-run incident.
Types of Auto Insurance Coverage: Optional Coverages
The two main categories of optional car insurance coverage are collision and comprehensive. The distinction between the two comes down to how a car is damaged. Usually, if damage occurs due to an incident while the car is being driven, it’s a collision. Damage or loss covered under comprehensive portions usually happen when a vehicle is parked. This includes damage from fire, theft, vandalism or extreme weather. You’re not obligated to add these. However, if you are borrowing money to purchase a vehicle, the enterprise loaning you the money may insist on collision and comprehensive coverage.
Each of these sections of your policy are subject to deductibles. A deductible is an amount you pay before the insurance company does. When you select a low deductible — $250, for example — your premium will be higher. The insurance company must pay sooner in the case of a claim, so you will pay more for that privilege. When you choose a higher deductible, such as $1,000 or $2,500, the insurance company’s risk is reduced and therefore so is your premium.
There are many other features, called endorsements, that you can add to customize your policy. If you travel and rent vehicles, for instance, adding a non-owned vehicle endorsement can save you the high cost of collision damage waivers through car rental agencies. These waivers can add substantially to the cost of a rental car’s daily rate. Accident forgiveness is another common add-on. Your first at fault accident will be forgiven by your insurance company if you purchase that endorsement. Loss of use endorsement pays for a rental car after an accident. For a new car, you can add a waiver of depreciation. This ensures cars up to two years old will be covered as if new.
Many other endorsements are available to further customize your policy. Not every insurer offers every endorsement, however. Some will specialize in certain fields. Talk to your agent or broker to arrange your best coverage.