Coverage 101: What questions to ask when getting car insurance

Are you getting your first car insurance policy, but don't know where to start? Don't panic; you're not alone. To ensure you purchase car insurance coverage that works for your driving habits and budget, browse through the common questions you should ask your insurance company when purchasing auto insurance below.

What information is needed for auto insurance

First things first. You're likely wondering, "What documents do I need for car insurance?" When you approach a car insurance agent or broker for auto insurance, you'll need to provide certain information to purchase your coverage, including the following:

• Current policy number and renewal date
• Years of prior insurance
• Vehicle details including the year, make and model of your vehicle
• Vehicle Identification Number (VIN)
• Driver’s licence number and dates licenced (all drivers in household)
• Current coverages and deductibles (all vehicles in household)
• Distance driven in kilometres (one-way) to work and driven annually for each vehicle (it is also important to note if your vehicle is used for business)
• Out-of-province experience letters and driver’s abstracts
• Details regarding any tickets (moving violations and/or suspensions) in the last three years or accidents in the last ten years (including date, type of accident or ticket)

What car insurance coverage do I need?

It's important to mention that car insurance in Canada is mandatory for all drivers, regardless of which province or territory they reside in. However, the types of policies and minimum coverage requirements can vary among provinces. So, make sure you ask your car insurance agent or broker what the requirements are for your province. For now, let's take a closer look at the different auto insurance policies most Canadians have in their plan:

Third-party liability coverage

Liability car insurance is mandatory for all drivers, regardless of which province they live in. This insurance policy protects you if you are an at-fault driver in a collision that causes bodily injuries or damage to a third party. If a lawsuit is filed against you, third-party insurance will cover damage costs, replacements, legal fees, medical bills, and other costs associated with a settlement, up to your policy limit.

Accident benefits coverage

Accident benefits coverage is legally mandated in all provinces except Newfoundland. This auto insurance will cover the cost of medical bills, lost wages, and other associated expenses that may be incurred if you, your passengers, or pedestrians are injured in a collision, regardless of who is at fault.

Uninsured automobile insurance

Uninsured automobile insurance is, again, mandatory in all provinces. This car insurance will cover the cost of vehicle repairs you require if you are involved in a collision with another at-fault motorist who is either uninsured or underinsured. Additionally, policyholders will also be compensated for hit-and-run accidents.

Direct compensation - property damage (DCPD)

Direct compensation - property damage is legally mandated in many provinces. . Other provinces have the option of opting out of this policy. Essentially, DCPD allows policyholders to deal directly with their own insurance company rather than a middleman if they are involved in an accident, ensuring they are fairly and swiftly compensated for their losses.

Comprehensive coverage

Comprehensive coverage is optional. However, most drivers opt to purchase comprehensive car coverage regardless. This auto insurance will cover the cost of damages your vehicle experiences as a result of a non-collision event listed in your policy. Common perils include theft, vandalism, falling objects, and high winds. Policyholders will need to pay a deductible to their car insurance company during the claim process before their provider will cover the remaining expenses.

Collision coverage

Collision coverage is another optional policy that most motorists choose. Collision car coverage is responsible for covering the cost of vehicle damages that occur during collisions for which you are responsible. Note that you will need to pay a deductible to your insurance company before your policy kicks in and covers the remaining costs.

Accident forgiveness

One final type of optional car insurance coverage popular among drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim.

Note: coverage varies by province.

How can I get cheaper insurance rates?

To get cheaper car insurance rates when insuring your vehicle, here's what you need to do:

Shop around and compare quotes

Unsure how to shop around for car insurance? Shopping around is easier than it may seem. All you need to do is speak with a car insurance agent at different insurers in your area and ask them to explain their policies and provide you with an insurance quote.

If you do not want to do this on your own, working with an insurance broker rather than a car insurance agent is highly recommended. Brokers work independently from providers, allowing them to compare quotes and policies on your behalf, free of cost.

Install winter tires

When insuring your vehicle, consider adding winter tires to your car. Most insurance providers offer discounts to drivers who install tires, as it helps mitigate risks when driving in the winter.

Install an anti-theft device

Another way to save when insuring your car is to install anti-theft devices on your car. Whether it be a dash cam, wheel lock, or alarm system, any devices that help mitigate risks of theft and vandalism can also provide a discount and lower your insurance costs.

Pay monthly premiums upfront

To save money throughout the year, consider paying your premiums upfront rather than monthly. Your insurer will add a monthly service fee to your payments, as it costs them money to process your payment each month. You can avoid these added fees by paying for your vehicle insurance in one go.

Ask about other discounts

Beyond tire and security feature discounts, there are also discounts for maintaining a clean driving record, taking a defensive driver course, being a member of a professional organization, and more. Make sure to ask your insurance agent or broker whether you qualify for savings, as it can make a significant impact on your costs.

Increase your deductible

Higher deductibles mean you're taking on more financial responsibility should you need to file a claim for damages in the future. By doing so, your insurer will provide lower premiums as a result.

What are some car insurance myths I should be aware of?

Car insurance myths can make working with an insurance agent or broker confusing. For example, a common myth we often prove wrong is that the colour of your vehicle plays a role in how much your insurance rates are, which is completely false. While your insurer will look at the make and model of your car, they won't use the colour of your vehicle to calculate costs. Keep in mind that if you drive a new car, you can anticipate higher costs.

Another example of a myth that travels around in the insurance world is that the most expensive premiums and policies are always the best option. This, again, is wrong! Your premiums should reflect the types of coverage needed to reflect your driving habits. There's no need to pay for car insurance you don't need, which is why working with an insurance broker rather than an insurer directly can be highly beneficial and help you save.

Will financing my vehicle affect my insurance rates?

Yes, if you lease or finance a vehicle, you can anticipate your premiums to be slightly higher. This is because your lease or loan agreement likely has a clause in it that states you need to purchase extra coverages like collision and comprehensive, to ensure the dealership or lender's interests are protected throughout the agreement.

What factors affect my insurance rates?

Factors that typically affect insurance rates include the following:

• Your age and gender.
• Your driving record and history.
• The make and model of your vehicle.
• Where you live.
• How often you drive.
• Claim history.
• The policies you choose and their policy limit.

Does my insurance policy provide a rental car if I get into an accident?

Whether or not your insurance provider gives you a rental car following a collision will depend on the specifics of your insurance. Rental car coverage is not automatically included in standard insurance plans. However, there is the option to add rental coverage as an endorsement to your insurance.

To confirm whether or not you have rental insurance, we suggest taking a look at your current insurance plan. If it is not already there, we recommend that you discuss options with your insurance company.

Does gender affect insurance costs?

Yes, gender does play a role in insurance rates. Historically, young males are more likely to be involved in an accident than other demographics. Given these statistics, insurance providers typically increase insurance rates for young male drivers in order to offset their increased risk rating.

Will my insurance cover family members who use my vehicle?

If you are the primary policyholder on your insurance and there are other drivers using your vehicle from time to time, you may be wondering whether they are covered, should they be involved in a car accident.

As an example, let's say your teen, who's learning how to drive, is using your vehicle to do so. To ensure they are covered when behind the wheel, you'll need to inform your insurance company that a secondary driver is using your vehicle. In this scenario, you may pay a bit more for your premium than you would if there were only one driver on the insurance.

That said, while you may pay slightly more for coverage, you'll have peace of mind knowing that they will be protected from liability should they cause an accident that causes harm to a third party.

Contact BrokerLink today for affordable car insurance

At BrokerLink, we help Canadians purchase affordable insurance policies tailored to their unique needs. Our experienced brokers have access to numerous coverage options from some of Canada's top providers, allowing them to customize your insurance policies, access discounts, answer your questions, and discuss your concerns.

To work with BrokerLink, come visit us at one of our many locations across the country. If there's no BrokerLink in your neighbourhood, you can contact us by phone or email. For now, get a competitive insurance quote using our free online quote tool!

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