Our insiders answer your top car insurance questions
Mar 10, 2016 10 minute read
Car insurance, while one of the most common types of coverage can also be the most complex. In this article, we answer the most commonly asked questions and answer them in one convenient location: here!
TABLE OF CONTENTS:
- What type of car insurance do I need?
- Am I covered if I experience a hit-and-run?
- What do I do if I witness a hit-and-run accident?
- What should I do if I hit a parked car?
- What happens if I leave the scene of a hit-and-run accident?
- Should I ever admit responsibility if I’m in a car accident?
- If I settle a fender bender out of pocket will it affect my insurance?
- Will my first accident affect my premium?
- Am I covered if items are stolen from my car?
- Am I covered if I hit an animal on the highway?
- How do I know if my car has coverage for hail damage?
- Does leasing or buying a vehicle affect my insurance?
- Am I covered by my policy for a rental car?
- Does carpooling affect my insurance?
- Am I covered if I lend my vehicle to my neighbour or friend?
- Can I be rewarded for my good driving behaviour with a discount on my insurance?
- Does my age or gender affect my insurance premium?
- How can I save money on my car insurance?
- Does taking driver’s education qualify me for insurance discounts?
- Do speeding and traffic tickets affect my insurance?
1. Q: What type of car insurance do I need?
A: There are five types of car insurance coverage available to Canadians.
All drivers are required to have both accident benefits coverage and third party liability coverage. Accident benefits coverage provides protection for medical treatment and lost income to help if you are injured in an accident. If you are the at-fault driver, third party liability covers damages caused to the other driver, their vehicle or their property, as well as any legal costs associated with a lawsuit.
Drivers can also choose to purchase the following types of coverage:
- Comprehensive coverage – provides additional protection for your vehicle against damage including break-ins, flood and water damage, fire, vandalism and falling objects. If you are driving a leased or financed car, you may be required to purchase this coverage to protect the car owner or lender’s investment.
- Collision coverage – pays for damage to your vehicle caused by a collision with another vehicle, object (such as a tree, guard rail or debris) or by an upset (such as a roll over). If you are driving a leased or financed vehicle, you may be required to purchase this coverage to protect the car owner or lender’s investment.
- All perils coverage – combines collision, comprehensive and glass coverage. All are subject to the same deductible.
2. Q: Am I covered if I experience a hit-and-run?
A: If the driver of the vehicle who hit your car cannot be identified, your claim will be paid out under the collision portion of your auto insurance policy and subject to your deductible (depending on your provider). However, if your auto policy does not have collision coverage, you may have to pay for the damages out of pocket.
If the driver who hit your car can be identified, report the incident to the police (in Alberta if damage is greater than $2,000) or a collision reporting centre (in Ontario if damage is greater than $2,000) as well as your insurance company as soon as possible.
If the driver has insurance, the loss will be paid out of their insurance policy.
Rest assured your insurance rates will not increase due to the hit and run, as long as you report the incident to the police or collision-reporting center and your insurance company.
Here are further tips on what to do if you are involved in a hit and run accident.
3. Q: What if I witness a hit-and-run accident?
A: After witnessing a hit-and-run accident:
- Assess the scene of the incident. If there are injuries or damage, call 9-1-1 immediately to report the incident.
- Ensure your own safety before approaching the scene. Remember, collision scenes can pose a danger due to leaking fluids and combustibles.
- Do not attempt to assist or move anyone injured at the scene of an accident. It is best to wait until paramedics have arrived for the safety of everyone.
Once the police arrive, you’ll be asked to complete a witness statement.
If you witness a hit and run accident to an unattended car, leave a note if you can’t find the driver. Provide your contact information and details of the incident and place in a visible location, such as under the windshield wipers.
4. Q: What should I do if I hit a parked car?
A: Always attempt to locate the owner of the vehicle.
If the driver cannot be found, you are obligated by law to leave written notice of the accident. Your note should be placed in a visible location on the car (usually under the windshield wiper) and should include your:
- Full name and address,
- Driver’s license number, and
- License plate
5. Q: What happens if I leave the scene of a hit-and-run accident?
A: Hitting a parked car then leaving the scene of the accident has serious consequences. Depending on the situation, police can charge the driver of the hit-and-run under the Criminal Code of Canada for “Failure to Stop at the Scene of the Accident” or “Failure to Remain at the Scene of the Accident” under the Highway Traffic Act. Penalties can include traffic tickets, fines, demerit points, license suspension, imprisonment, and an increase in car insurance rates. Remember, all accidents must be reported to your insurance company regardless of fault and the damage amount.
6. Q: Should I ever admit responsibility if I am in a car accident?
A: No. Your insurance company reserves the right to defend you following an insured loss. You should never admit fault in an accident until your insurer has the opportunity to review the file and determine how they would like to proceed. If you are unsure of what to do in the event of a car accident, our helpful accident checklist is downloadable and can be stored in your glove box should you need it.
7. Q: If I settle a fender bender out of pocket will it affect my insurance?
A: Possibly. Even if you choose to settle damage with a third party without involving your insurance company, the third party has up to a year (from the date of loss) to file an insurance claim for damages to their vehicle, and up to two years for any injuries that may have occurred. If they file their claim before the deadline, their insurance company will notify your insurance company and your premiums could still be impacted. Talk to your BrokerLink broker about your situation.
8. Q: Will my first accident affect my premium?
A: Not necessarily. Several insurance providers offer a first-time claim protection or accident forgiveness program. Speak to your BrokerLink broker about whether your insurer offers this program.
9. Q: Am I covered if items are stolen from my car?
A: No. Your auto policy covers only your car, not the possessions you keep in it. In order to have coverage for theft of items inside your car, you need to have adequate coverage through your home, condo or tenants insurance. If you are not sure you have the right coverage in place, contact your local BrokerLink broker for a free policy review.
10. Q: Am I covered if I hit an animal on the highway?
A: Yes – if your auto policy includes comprehensive or all perils coverage.
11. Q: How do I know if my car has coverage for hail damage?
A: Whether or not your vehicle is insured for hail damage depends on the type of policy you hold. If you only have liability insurance, you will not be insured for any hail damage. Comprehensive or all perils policies can cover hail damage to your vehicle. However, you will always be required to pay your deductible.
12. Q: Does leasing or buying a vehicle affect my insurance?
A: No. Leasing or buying a vehicle does not change how much you pay for insurance. For leased vehicles, full comprehensive and collision coverage is required and we recommend it even if you own a vehicle too.
13. Q: Am I covered by my policy for a rental car?
A: If you have an SEF 20 added to your policy, in the event of an insurable loss, such as a collision, hail, fire, theft or additional upset, you will be provided a rental car for use while your vehicle is not drivable and while repairs are being completed. This endorsement has a maximum amount payable. Contact your broker concerning the limit of coverage you need.
In most cases your current auto policy will extend accident benefits and third party liability coverage to a rental car. However, physical damage or a loss to the rental vehicle is not covered with basic insurance, but can be covered if you have comprehensive, collision or all perils coverage on your current auto policy, with certain exceptions. Depending on the situation you may need additional coverage (SEF 27) on your policy.
Certain insurance providers have limits on each endorsement listed above. Talk to your BrokerLink broker to confirm if you have SEF 20 and SEF 27 endorsements on your current car insurance to know if you are completely covered.
14. Q: Does carpooling affect my insurance?
A: Increasing the number of regular passengers in your vehicle can increase the likelihood of an injury and liability claim in the event of a collision. As the driver of a carpool, all passengers in the vehicle are granted coverage under your policy, whether they have their own coverage or not. The type of car pooling arrangement in place can impact your premium. Be sure to advise your broker if you decide to participate in a car pool.
If you plan on having a higher number of passengers in your vehicle, it is a good idea to carry a higher than normal amount of liability insurance. At least $2,000,000 in liability insurance is recommended to protect yourself and your passengers.
15. Q: Am I covered if I lend my vehicle to my neighbour or friend?
A: Yes. When you lend your car, you lend your insurance too. In the event of a loss or incident your auto insurance policy will cover any damage. However, if you are deemed at fault in the incident, your policy premium could be affected by the claim for up to six years.
16. Q: Can I be rewarded for my good driving behaviour with a discount on my insurance?
A: Usage-based insurance (UBI), sometimes referred to as “telematics”, is a way that insurance providers offer insurance premium discounts for safe driving habits. A device is installed in your vehicle that tracks your driving habits to determine how much you can save on your insurance premium.
While some people believe the device acts as a GPS and will track and monitor where you drive, this is not the case. Usage based devices for insurance only monitor the following:
- Rate of acceleration. Are you consistently accelerating to make the next light?
- Hard braking. Are you following too close and frequently slamming on the brakes?
- Time of day. If you’re driving during 12 a.m. to 4.am, you could be more likely to get into an accident.
If you live in Ontario, Intact Insurance offers the My Driving Discount™ with an instant 10% off when you install the free money-saving device. As your vehicle monitors your driving habits, you can save up to a further 15% off your premium at renewal.
In Alberta, you can be rewarded for having good insurance history. When you have several years of driving experience with no accidents or driving convictions, some insurers will discount your insurance. Sometimes this discount is behind-the-scenes, while others show it as an “experience discount.”
17. Q: Does my age and gender affect my insurance premium?
A: Yes – Insurance costs are based on several factors such as:
- driving record, including speeding convictions or tickets and claims
- experience – number of years licensed
- number of previous insurance collision claims
- vehicle use – daily and yearly mileage and business use
- under age 25, gender – it’s not uncommon for males to pay a higher price than females
- make and model of vehicle
- location (postal code)
- if this type of vehicle is frequently stolen
- any modifications to the car, affecting the drivability
- crash safety ratings impact the accidents benefits portion
18. Q: How can I save money on my car insurance?
A: Increasing your deductible, bundling your policies and becoming part of a professional association or group are just a few of the ways you could save on your car insurance premium. The best way to keep your premiums from increasing is by being a safe driver. More ways to save on car insurance.
19. Q: Does taking driver’s education qualify me for insurance discounts?
A: Yes. Taking a government approved driver’s education course gives young or new drivers a substantial decrease in their insurance rates. Graduates could save up to 15% on their car insurance, which is the same discount you would receive for having three years of safe-driving experience. Remedial driver education courses to restore points are not considered for discount purposes.
20. Q: Do speeding and traffic tickets affect my insurance?
A: Yes. Any time you are convicted of a traffic violation, that violation will remain on your driving record for three years. This includes minor offences such as speeding tickets or major offences such as reckless driving or driving under the influence.
The next time you have a question about what type of coverage you need, the factors that affect your car insurance or what to do if you’re in an accident, look no further than this handy guide. If at any time you have questions about your car insurance, your BrokerLink broker is happy to help.