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Updated: Apr 18, 2023, 1:28pm
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When you buy a new car, you most likely spend a fair amount of time comparing options to find the best ride at a fair price. Buying car insurance should work the same way. Unfortunately, too many car owners skip this crucial step and end up spending more money than they should.
Car insurance prices can vary widely by company for the exact same coverage. If you want to find the best car insurance for a reasonable price, here’s how to do it.
Here’s the information you’ll need to jump-start a car insurance shopping journey:
The Financial Services Regulatory Authority of Ontario provides this handy checklist.
Before you buy a car insurance policy, the first step is to figure out how much car insurance you need. If you buy too little coverage, you could be woefully underinsured. But if you buy too much, you’ll be overpaying.
Here are some common coverage types you’ll need to consider.
If you cause a car accident, third-party liability car insurance pays for property damage and injuries to others, such as their car repair bills. It also covers legal expenses if someone sues you because of an accident.
Third-party liability insurance is mandatory across Canada and each province has its own minimum requirement. For example, in Alberta the minimum is $200,00, while in Nova Scotia the minimum is $500,000. There may also be caps on how the maximum is allotted. In Ontario, for instance, if a claim involving both bodily injury and property damage reaches the $200,000 minimum, payment for property damage will be capped at $10,000 and the balance will be attributed to the bodily injury claim.
But here’s the problem: The minimum required amount of liability insurance required by each province is generally inadequate. For example, if you bought the minimum amount in Ontario and caused a car crash that resulted in multiple injuries and more than $200,000 in damage and lawsuits, you’d be on the hook for an amount above that minimum.
A good rule of thumb is to buy enough liability insurance to cover what you could lose in a lawsuit.
This coverage pays for medical costs, rehabilitation expenses and financial compensation, including income replacement, if you are injured in a collision regardless of who caused the accident. It also covers funeral expenses and payments to your survivors if you are killed in an accident.
This coverage is mandatory across Canada, except in Newfoundland and Labrador, and you can increase the standard minimum.
This covers the damage to your vehicle and its contents when another driver is at fault for an accident. It’s called direct compensation because you collect from your own insurance company, rather than the at-fault driver. There may be a deductible for this coverage. DCPD is currently mandatory in Nova Scotia, Ontario, New Brunswick, Newfoundland and Labrador, PEI, Quebec and Alberta.
Driving with valid auto insurance is the law. But while numbers are hard to come by, there are still drivers who get behind the wheel without insurance. And some drivers have insurance but not enough to cover an expensive car accident. So what happens if an uninsured or underinsured driver crashes into you?
Uninsured automobile insurance protects you from injuries or damages if you’re hit by an uninsured motorist or an identified hit-and-run driver and they’re considered at fault. Uninsured automobile is mandatory in most provinces and part of a standard policy. Injuries are typically covered under the accident benefits of your policy, but uninsured automobile coverage can be used for any claims above that minimum. It also protects you from damage to your car, unless the incident was caused while your car was parked, for instance, and then you’ll need to make a claim under the comprehensive portion of your insurance.
If you want coverage for car repair bills for your own vehicle, you’ll want to buy collision and/or comprehensive insurance, which are both optional, except in Manitoba and Saskatchewan. While two these coverage types are often sold together, they cover two different groups of problems:
If you have a car loan or lease, your lender or leasing company will likely require that you carry both collision and comprehensive insurance.
In addition to the standard auto insurance options, you may want to buy extra coverage, often called endorsements, to ensure you’re fully protected:
When you have determined how much car insurance you need, the next step is to compare car insurance quotes from multiple insurance companies. (A good rule of thumb is to get three quotes.) Car insurance rates can vary a lot from insurer to insurer for the exact same coverage, so don’t skip this vital step.
You can get free quotes:
Once you identify the company and policy you want, it’s time to make an auto insurance application.
Some insurers will offer a discount if you pay the full term up front. If you don’t want to pay in full, you can typically choose monthly instalments. You might be able to get another small discount for using automatic withdrawals.
When you have a policy the insurance company will send you proof of insurance via email or mail. Some insurers have a mobile app that downloads your proof of insurance.
If you are purchasing a new or used car, most provinces require proof of insurance before you can register the vehicle and drive it off the dealership lot.
If you already had insurance in place on your current car, make sure your new coverage is active before cancelling the previous policy. You should get a refund for the unused months on the old policy.
Make sure you get confirmation that your policy was cancelled.
If you cancel auto insurance before the new coverage is effective, your car will be uninsured, which can have serious legal and financial consequences if you get into a car accident—meaning you will have to pay for all damages and expenses out-of-pocket, and you could be ticketed for driving uninsured. You may also have to pay more for your new policy, as a lapse in coverage can hike rates.
Whether you’re a car insurance newbie or an expert, here are some helpful tips worth considering when buying a car insurance policy.
There are ways to save on car insurance, such as:
It’s good to regularly review your auto insurance coverage to make sure it still meets your needs. The policy you bought 10 years ago may no longer be adequate or competitively priced. For example, the amount you drive each day to work has an impact on your insurance premium. If you recently switched jobs and now work full-time from home, that can reduce the amount you pay each month.
Sure, you want to find car insurance at the best possible price. But cost isn’t everything. If you have to file a car insurance claim, you want an insurance company that has a solid reputation for customer service.
The best car insurance companies combine good service at a competitive price.
You can typically buy a new car insurance policy in less than an hour. To make the process go smoothly, you’ll want to have all of your information gathered (like driver’s licence numbers) and know how much car insurance you need.
You can get free insurance quotes online or through auto insurance agents. If you find a policy that meets your needs and budget, you set your policy effective date and start coverage.
Yes, some insurers give you the option to buy car insurance instantly. You can select your coverage online or through an insurance agent. Once you submit your payment, you may be able to download your proof of insurance card and store it on your mobile device. Electronic motor vehicle liability insurance cards, also known as eSlips, are allowed in New Brunswick, Alberta, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Ontario, PEI, Quebec and Yukon.
It’s important to remember that your car insurance goes with the car, and not the driver, and if you lend your vehicle, you lend your insurance record. Every licensed driver in your household who regularly or occasionally uses your car should be listed on your policy. This would include your spouse, significant other, children, other family members who live with you and roommates.
You should also list anyone who drives your car on a regular basis, even if they don’t live in your household. For example, a caregiver who regularly drives you to appointments or a babysitter who drives your kids to soccer practices should usually be listed.
Ashley is a personal finance writer and content creator. In addition to being a contributing writer at Forbes, she writes for solo entrepreneurs as well as for Fortune 500 companies. Through her financial expertise, she provides millennials and young professionals the tools and resources they need to better manage their finances.
How To Get Car Insurance (5 Easy Steps) – Forbes Advisor Canada – Forbes
