| What is auto insurance? Simply stated, car insurance protects you
against the financial losses you would suffer if you were involved in an automobile
accident. Your insurance company pays for these losses out of the pool of insurance
premiums it collects from its thousands of customers. If you have no car insurance, you
risk losing your savings, your home and your personal assets every time you get behind the
wheel of your car.
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What types of car insurance coverage are available?
The financial protection offered through car insurance covers many areas:
 | It protects you against claims if you're responsible for an accident causing
injury or death to another person. Similarly, you are protected in the event you damage
someone else's car or property (this is known as Third Party Liability). |
| It can protect you, your family and your passengers against financial losses
caused by injury in an automobile accident and it can provide financial compensation for
dependents in the event of your death (this is known as Accident Benefits). |
| It can also protect you against the cost of damage to your car from a collision
or other causes (this is known as Collision or Comprehensive). |
Steers Insurance can advise you on the best protection for your personal needs
at a fair price. Also, when purchasing a new car, it is advisable to investigate the cost
of insurance in advance. You'll find that the cost varies according to the price and type
of car, and this may have a bearing on your purchase decision.
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How is my coverage
guaranteed?
Once you've decided what coverage you want, an insurance contract is
established between you and your insurance company. The terms of this contract are set out
in your policy, which is approved by the provincial government acting through the
Superintendent of Insurance. Each policy, therefore, is designed to meet the needs and
desires of the individual car owner. The Superintendent of Insurance monitors the actions
of insurance companies to protect your interests.
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Do I have to buy car
insurance?
Yes. By law, anyone who owns a motor vehicle and drives on public roads
anywhere in Canada is required to have certain basic coverage. You have to purchase
Accident Benefits insurance, Uninsured Automobile coverage and at least $200,000 worth of
Third Party Liability insurance.
There is one exception. In Newfoundland and Labrador, Accident Benefits
insurance is not compulsory, but we strongly recommend you availof this coverage.
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What is 'Third Party
Liability' insurance?
Third Party Liability insurance covers you if your car injures someone
else or damages his or her property. Should a claim against you be more than your level of
coverage, you can be held personally responsible for the balance. For this reason, most
drivers purchase more than the minimum $200,000 coverage required by law.
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What are 'Accident
Benefits'?
Accident Benefits coverage is compulsory in all provinces except
Newfoundland and Labrador. It provides compensation if you, your passengers, or
pedestrians suffer injury or death in an automobile accident. The compensation is paid
regardless of who is at fault in the accident. The following are the categories of
compensation provided by Accident Benefits. The amounts paid in each category vary from
province to province.
| Medical: reimbursement for the cost of medical treatment not covered by any
medical, surgical, dental or hospital plan or law. |
| Funeral: payment towards funeral expenses of those killed in a car accident. |
| Death: a lump sum payment following the death of an insured person; the amount
will depend on the age, marital status and the number of dependents of the deceased. |
| Total disability: a limited weekly payment to employed individuals totally
disabled in a car accident. |
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What is 'Uninsured
Automobile' coverage?
Uninsured automobile coverage provides compensation up to $200,000 if you
are injured or killed through the fault of a motorist who has no insurance. Except for New
Brunswick, this coverage is part of Accident Benefits. You receive payment under this
coverage unless the province or territory where you were injured has a special fund from
which to claim. You will be reimbursed for the money you would otherwise be entitled to
receive from the uninsured motorist. New Brunswick does not have such a fund, so victims
of uninsured motorists in that province look to their own insurer for reimbursement under
the Uninsured Automobile coverage. There your recovery is based on the amount you would be
entitled to receive from the uninsured motorist in a lawsuit.
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What are the penalties
if I don't have insurance?
The law requires you to pay for any damages for which you are held
legally responsible in an accident. If you are not insured and cannot pay, special funds
administered by the government or the insurance industry are used to reimburse the person
who made the claim against you. Your driver's licence may then be suspended until you
arrange to repay the fund. You will also be charged by the police for failing to have
insurance. The penalty may include severe fines. When you purchase car insurance, you
receive a Canada Inter-Province Motor Vehicle Liability Insurance Card (known as your
insurance pink slip). You should keep this in your car at all times and produce it when
requested by a police officer. It is honoured as proof of insurance in Canada.
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What coverage is
available to pay for damage to my car?
Coverage for damage to your own vehicle is optional. Various categories
are available (All Perils, Collision, Comprehensive and Specified Perils) to cover
incidents such as collision, vandalism, fire and theft.
--Loss or damage from mechanical breakdown, normal wear and tear, rust,
corrosion, etc., is not covered.
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Are there any other
coverages I can buy with my car insurance?
A number of other options are available which tailor your policy to your
particular needs. These include coverage to a stated dollar limit in the event your car is
so badly damaged that it cannot be repaired; protection against depreciation in the first
two years of owning a new vehicle; and protection in the event that the person responsible
for your accident doesn't carry adequate Third Party Liability insurance. You should
discuss your insurance needs with your broker to obtain a more complete explanation of
these options and ensure you are adequately protected.
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What is a deductible?
The deductible is the portion you agree to pay on any damage to your car
before your insurance comes into effect. A common collision deductible, for example, is
$250. This means that you would pay the first $250 of any repair bill and your insurance
company would pay the balance. Any damage that cost less than $250 would therefore be your
own responsibility. There is no deductible in the case of fire or theft of the entire
vehicle.
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Does the deductible
always apply?
Yes, the deductible applies to any damage claim you make on your policy,
even if the accident was not your fault. In such cases your insurance company may try to
recover the money it has paid, as well as your deductible, from the person responsible for
the accident.
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If my car is damaged
and in the shop, will my insurance pay for a rental car?
Not necessarily — it depends on what type of coverage you have. If
you rely on your car for daily commuting, you should consider including the cost of
renting a car as part of your coverage.
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What do I do if I have
a claim?
Contact you broker as soon as possible to advise that you've had a loss.
In cases of injury in a car accident, or if theft or break-in is involved, the police must
be told as well. Once your insurance company has been advised, a claims specialist —
called an adjuster — will be assigned to look after your claim. The amount you
receive for your claim will depend on the type of coverage you bought.
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What is the role of the
claims adjuster?
The adjuster’s job is to determine the facts relating to the claim
and the extent to which the claim is covered by insurance. The adjuster also attempts to
reach an agreement with the other people involved regarding the amount of their loss and
extent of their responsibility. Your insurance company pays for the adjuster.
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How long after an
accident can I make a claim?
Although it is recommended you notify your insurer as soon as possible if
you’re making a claim, your policy states that a written declaration must be made
within 90 days of the loss or damage. If you don’t make your claim within the 90
days, the insurance company may not be legally bound to honour your claim. In practice,
however, most companies will honour a claim made within one year if there is a plausible
reason for the delay.
If you’re making a claim against another driver, you should notify his or
her insurance company as quickly as possible. Under some circumstances, and in some
provinces, the claim against the other driver must be started within one year; in others,
within two years.
Note: It is recommended that you notify
the other driver’s insurance company of the claim yourself. Do not assume that the
other driver has done so.
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How are claims settled?
The vast majority of claims are resolved amicably through negotiation. A
car insurance policy is a legal contract between you and your insurance company. As with
any contract, the courts have the final decision in any disagreement between you and your
company, or in any dispute between you and another person involved in the same accident.
In such cases, the court decides who is responsible and may also decide the extent of
damages to be paid.
What will my insurance pay for if my vehicle is damaged in an accident? If you
have collision coverage, your insurance company will pay for the repair, replacement or
actual cash value of your car at the time of the accident. Of course, you will be
responsible for the deductible. If your car can be repaired, your insurer is responsible
to pay for repairs to the damaged area only. If the repair cost is close to or more than
the actual cash value of the car, the company may decide to write-off the vehicle instead
of repairing it and pay you the cash value. When your car is being repaired, you may wish
to get additional work completed which is not a direct result of the accident. This is
permissible, but the extra repairs would be at your expense.
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What happens if my
vehicle is damaged in an accident but I don’t have collision coverage?
If the accident were the other driver’s fault, you could claim
payment of your damages from the guilty driver. If it were your fault, you would
personally be responsible for your damages.
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What will my insurance
company pay for if I damage someone else’s property?
If you are responsible for the accident your insurance company will pay
for damage to the other driver’s car. It will also pay for repairs to any other
property damaged by your car, such as fences, poles or buildings.
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What payments are made
in an injury claim?
Payments for any injury to you, your passengers or a pedestrian fall into
two basic categories:
| Compensation for specific costs or losses (known as special damages), such as
medical bills, lost wages, ambulance and hospital expenses, funeral costs; |
| Compensation that must be estimated (known as general damages), such as for
future disability and expenses, pain and inconvenience and reduced life expectancy. |
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Will my insurance
company help me if I’m involved in legal action after an accident?
If someone claims you are at fault in an accident and sues you, your
insurance company will provide lawers to defend you and will pay the legal costs.
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How important is
responsibility or fault in a car accident?
Payments under Collision, Comprehensive and Accident Benefits coverage
are made regardless of fault.
However, responsibility is of prime importance under Third Party Liability
coverage. In these claims, the person held responsible for an accident may be required to
pay for damages to the other driver’s car, for other property damaged in the
accident, and for any injury claims resulting from it. For this reason you should ensure
you have adequate Third Party coverage. Drivers who are at fault in an accident may also
face higher insurance costs by losing their claim-free driving record.
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Can fault in a car
accident be shared?
Yes. The circumstances of an accident may show that more than one driver
was negligent. Each driver’s insurance company may then become involved in the
settlement based on the degree of responsibility attributed to each person. If there is a
dispute about responsibility, court action may be required to resolve it.
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What factors affect the
cost of my car insurance?
Insurance companies consider a number of aspects when calculating an
individual’s premium. The key ones are: type and age of car; whether you use your car
for pleasure or business;annual mileage and territory of use; your age; your driving
record; your insurance claims record; and other drivers in the household who use your car.
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How does the type of
car I drive affect the cost of my insurance?
The type of car you drive generally does not affect the premium you pay
for Third Party Liability insurance.
It does, however, affect the cost of coverage for physical damage to your car.
Insurance companies rate cars according to their safety record and the cost to repair or
replace them. Collision and Comprehensive insurance varies according to these ratings.
Some companies also charge more to insure certain types of high-powered cars or those
which have been increased in value by customizing.
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Why does driver’s
age affect the cost of insurance?
Statistics show that younger and less experienced drivers have a greater
chance of being involved in an accident. Young, unmarried men are involved in
proportionately more accidents than any other group. These facts are reflected in
insurance costs. Many insurance companies provide a discount to newly licenced drivers,
regardless of age, who have passed an approved driver training course.
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How important is my
claims record in the cost of my car insurance?
You may receive a discount on your premium for each year that you remain
‘claims-free’, to a maximum of 5 or 6 years. The method and amount of discount
varies from company to company. Some companies will ‘forgive’ a minor claim and
not change your no-claim status. If you are at fault in an accident, your premium may
return to the company’s standard rate until you build up a claim-free record again.
If you change insurance companies, your premiums will likely reflect your claims record
with your previous insurer. You should also be aware that your premium could increase if
another driver is a fault in an accident while driving your vehicle with your permission.
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How does my driving
record affect the cost of my car insurance?
Your record of moving traffic violations could be an indication of how
responsible you are as a driver and therefore how likely you are to be involved in an
accident. Most companies take this into account when calculating your premium. If your
insurance covers other people who drive your car, their records may also be considered
when your premium is calculated.
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How do companies sell
car insurance?
Car insurance is offered to the public in two ways. The first is through
independent brokers, who represent several insurance companies. The second is through
agents or sales representatives, who sell on behalf of one company directly to the
consumer.
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What is the role of the
broker in dealing with car insurance companies?
Acting as an intermediary between the customer and the insurance company,
the broker, such as Steers Insurance, provides the following services:
| Advice on the type and amount of insurance you should buy. |
| All of the paperwork in setting up or renewing a policy, e.g. change of vehicle,
additional coverages, change of usage. |
| Assistance at the time of making a claim. Brokers can help to speed up the
settlement of the claim. They are not, however, allowed to give legal advice. |
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How do I know if
I’m getting the best price for my car insurance coverage?
Insurance companies are highly competitive in the price and service they
provide. Many types of sales and service improvements have been developed by individual
companies to meet the needs of Canadian motorists. These variables are reflected in the
premiums charged. You should talk to your insurance broker to ensure you are receiving the
best combination of coverage, service and price for your individual needs.
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Why do car insurance
premiums vary from one province to another?
Car insurance premiums vary according to your likelihood of being
involved in an accident. Factor such as geography, climate, and traffic congestion affect
the frequency and cost of claims. And the cost of claims, more than anything else, is what
determines your premium.
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What happens if my
insurance company goes bankrupt?
Everyone insured by a private insurance company in Canada is protected by
a special fund administered by the Property & Casualty Insurance Cmpensation
Corporation. It is financed by the general Insurance industry to protect policyholders.
If a property and casualty insurance company (which includes car insurers)
becomes insolvent, this special fund ensures that all pending claims are paid, up to a
ceiling of $2000,000 or the limit of the policy, whichever is lower. The deductible is
either $500 or the usual deductible for the policy, whichever is greater.
You are therefore guaranteed financial protection, even in the unlikely event
that your insurance company goes bankrupt.
It is important to realize that insurance companies in Canada have a high degree
of stability and operate within stringent government guidelines. These include a
requirement to maintain substantial capital and to hold strong financial reserves.
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What other types of coverage do general insurance
companies offer?
Most insurance companies offer full insurance protection for your home,
personal belongings and business. If you require additional insurance, you should review
your needs with your broker.
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