What is Auto Insurance?
Auto insurance or vehicle insurance is insurance coverage for all types of land or road vehicles. The primary purpose is to provide financial protection against physical damage and physical injuries resulting from traffic collisions and liabilities that are caused by these incidents. The specific terms of vehicle insurance vary with legal regulations in each region.
This article tackles mandatory vehicle insurance coverage, auto insurance in Canada and minimum coverage.
What is Mandatory Vehicle Insurance Coverage?
Mandatory Insurance Coverage is required in Canada since some people do not have the money to pay for losses such as damage to property, injury or death that may be caused while they are driving. The government requires drivers to carry a certain amount of insurance to cover any losses for liabilities. Provincial and territorial governments in Canada also require drivers to acquire insurance policies for their own medical expenses and loss of income resulting from driving-related injuries (Accident Benefits/Bodily Injury or AB/BI).
Under the Optional Insurance Coverage, you can also voluntarily purchase additional insurance for your car, including the following:
• Coverage for damage to your car (Collision)
• Protection against theft, vandalism and other perils (Comprehensive)
What is Auto Insurance In Canada?
There are 10 provinces in Canada. Each one has a very unique way of managing auto insurance regulations. You may be required to purchase insurance through a government-run agency depending on where you live. You also have the option of obtaining insurance through a private company. While the provinces set a minimum standard for insurance coverage, it is always considered beneficial to secure coverage in excess of the province’s minimum requirements. All of Canada’s provinces have some form of no-fault insurance wherein benefits are paid to all victims in an accident. Depending on the province, the ability for someone to sue for further damages can be different. The type and scope of insurance required also varies according to province.
What is the Minimum Coverage?
Just like the United States, most provinces in Canada require minimum coverage. The amounts may be different. However, you must maintain minimum coverage to purchase or register a vehicle, have your vehicle repaired by a mechanic or drive your vehicle on the road. It is important to maintain minimum coverage as indicated by your insurance card or insurance folder. These are for various cases such as collision and property damage. Each one carries a separate minimum required coverage. With regards to credit score prohibition, insurers are prevented from using a credit reporting score against a customer for any decision based on insurance coverage, denial of insurance or insurance premium calculation. However, insurers cannot legally use credit information to make these decisions. It is important to note that in Canada, there are laws that allow drivers to sue for medical and other damages in case of an accident. The right to sue for economic loss (such as being disabled and unable to return to work), as well as the right to sue for pain and suffering faced after an accident, are both allowed under Canadian law. Provisions also exist in Canadian law for disability income replacement through insurance channels in the event that you are injured in an accident where there is no other vehicle or you are at fault and cannot work. Again, these laws vary by province, so you will want to make sure you have the proper information before choosing an insurance provider or filing a claim.
Auto Insurance Complexities
Motorists and car owners should be aware of all laws covering auto insurance matters. However, obtaining insurance coverage does not mean that drivers should not be careful on the road. The major factor still is to be safety-conscious to avoid unnecessary loss of lives, injuries and damage to vehicles.