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How Does Car Insurance Work and Do I Need a Car Insurance Broker?

Oct 7, 2020 2 minute read

Car insurance broker

If you have a car in Canada, you probably have car insurance (since it is mandated by law in most provinces), but how does car insurance work?

Car insurance might seem daunting as a first-time driver, but it is not something that can be neglected. In Canada, having car insurance is a legal requirement, one that could slap you with fines, fees, and even jail time for noncompliance.

Getting affordable car insurance will cover you if you are responsible for an accident. Beyond this, car insurance will cover you in the event of a wide range of other eventualities.

What's more, you can even use a car insurance broker to keep costs down and find the right deal for you. So, what is car insurance and how does it work? Read on to find out.

1. How Does Car Insurance Work in Canada?

Before getting into how much is car insurance, it's worth laying out how exactly it works in Canada. According to the law, all insurance packages in Canada must contain at least three types of mandatory coverage. These are:

  • Third-Party Liability: This kicks in if you are responsible for an accident in which damage is caused or someone else is injured or killed. This insurance will cover the costs of lawsuits against you. The minimum amount of coverage required is $200,000.
  • Uninsured Automobile: This protects you against damages if you are involved in an accident in which the person at fault is an uninsured driver.
  • Accident Benefits: If you are injured in a car accident, this coverage will pay for lost wages and medical expenses.

Once you have bought and received this coverage, as well as an insurance contract and policy certificate, you are covered. The best car insurance will cover far more than just these three outcomes.

2. How Does Car Insurance Work After an Accident?

If you are in an accident in Canada, there are some steps you will need to follow. You will need to stay at the scene of the accident. Make sure to exchange information with other drivers involved if possible, including your insurance policy numbers, contact details, and address.

Notify the police as soon as possible, as you may need a report from them.

3. What Are the Benefits of Car Insurance?

There are countless benefits of car insurance in Canada. For one, you will be on the right side of the law. In addition, you can enjoy the peace of mind of knowing that an accident or freak event when driving will not be financially ruinous.

What's more, an insurance broker will be able to get you the lowest car insurance quotes around. This will ensure that you are fully covered without breaking the bank.

4. Does Your Insurance Go Down if Your Car Is Paid Off?

In most cases, your insurance premiums will decrease significantly once you have paid off your car. This is because paying off your car removes a clause from your policy that requires you to pay more.

Paying off your car will also likely improve your credit score, leading to even lower insurance premiums. However, don't forget that older cars mean more expensive insurance policies. The longer you take to pay a car off, the more you will pay in insurance.

Access an Expert Car Insurance Broker Today

If you want complete coverage at low prices, you need a car insurance broker. Fortunately, we have got you covered.

If you want to find a broker that will get you the policy you need at the right price, you can get a quote from us today for free.