All Canadians must have “Third Party Liability” Coverage which insures their vehicle against an accident that might involve injury or death or damage to their property. “Accident benefits is also included in this coverage which will provide you with benefits if you are injured in an accident.
Graduated licensing is a multi-stage program to allow new drivers on-road driving experience under conditions of reduced risk. Graduated licensing generally restricts highway, night-time and unsupervised driving during the early stages. Throughout the later stages, restrictions are removed once the driver completes further testing.
Graduated licensing laws vary from province to province.
Collision coverage covers accidental loss or the cost of repairing your vehicle if involved in a collision with another object or tips over. Collision coverage is optional to purchase but usually required if your vehicle is financed or leased.
There is usually a deductible amount indicated and this amount is either paid by you, toward the cost of repairs or is deducted from the loss settlement. Higher deductible lowers your insurance premium.
Comprehensive coverage covers accidental loss or the cost of repairing your vehicle if damaged by fire; theft; attempted theft; vandalism; lightning; windstorm; hail or rising water; earthquake; explosion; riot or civil disturbance; falling or flying objects and missiles.
Comprehensive coverage is optional to purchase but usually required if your vehicle is financed or leased. There is usually a deductible amount indicated and this amount is either paid by you, toward the cost of repairs or is deducted from the loss settlement. Higher deductible lowers your insurance premium.
Insurance companies offer a better driving record to drivers who have completed an accredited drivers training course within the last 3 years. Your insurance company may ask for a copy of your drivers training certificate.
You may qualify for a retiree discount if you meet the following criteria:
- You do not earn or receive income from any office or employment.
- You are not engaged in any professional occupation.
- You do not operate a business and have not been employed for 26 weeks or more in the last 52 weeks.
- You are 65 or older or you receive a pension under the Canada Pension Plan (CPP) or the Quebec Pension Plan or receive a pension registered under the Income Tax of Canada.
If involved in a car accident, your insurance company is required to assign the percentage of fault for each of the drivers involved in the accident. Insurance companies determine responsibility for an automobile accident according to the “Fault Determination Rules” located in the Insurance Act. These rules allow insurance companies to fairly assign fault in accidents resulting in fair compensation for everyone involved.
Pleasure use includes driving to and from work. Business use means that you use your vehicle either full time or part time for your work; e.g., sales calls, etc.
Provides coverage if you are legally responsible for an automobile accident that causes bodily injury or death to another person or damages to property.
A lapse of insurance coverage will impact your driving record if:
As part of the Ontario policy, you agree to inform us of any incident involving the automobile that must be reported to the police under the Highway Traffic Act or for which you intend to make a claim under the policy. The Highway Traffic Act of Ontario indicates that you must report any accident that involves an injury, and must report any accident in which the total damages to all vehicles and property is greater than $1000. You must notify us within 7 days after the accident, or if unable, as soon as possible after that.
The deductible is the amount you agree to pay toward the cost of any claim you make and the deductible, if any, is shown on the Certificate of Automobile Insurance. The deductible applies each time a claim is made and separately to each automobile that is insured. Some sections of coverage do not have a deductible. For example, if you are involved in a motor vehicle accident in Ontario involving another vehicle and the other vehicle is “at-fault” for the accident, and if the other vehicle has valid insurance you will typically not be required to pay a deductible.
After an accident, it is important for you to obtain complete information on the other party or parties involved. For example,
- all vehicle information
- License plate numbers
- All names, addresses, and phone numbers
- drivers license numbers for the other involved drivers
- the location of the accident, e.g. major intersections
- police information (if they attended the scene)
If the police have attended the scene, it is reasonable to assume that they will secure much of the above information. It is important that you get the officer’s name, badge number and report number so that we can get the police report.
High-risk drivers are those drivers who have had a number of convictions or at-fault accidents, had policies cancelled because they haven’t paid their premiums, or have other risk-related characteristics.
The Facility Association, an insurance pool that all auto insurance companies belong to, is an insurer of last resort, which makes auto insurance available to high-risk drivers who are unable to find automobile insurance in the regular market. As well, there are a number of “non-standard” insurers who specialize in insuring high-risk drivers.
Your auto insurance rates are determined by a combination of factors including:
- Your Personal Profile
- The Amount of Coverage You Purchase
- Your Deductible
- The Insurance Company You Choose
1. Your Personal Profile
The type of vehicle you drive: Many insurance companies rate makes and models of vehicles according to their actual claims experience, such as the cost of repairs, the rate of injury, and the likelihood that a particular vehicle may be stolen or involved in an accident.
Your driving record: The premium you pay also depends on your driving record. This includes accidents where you are more than 25 per cent at-fault1, the length of time you have been licensed to drive, whether or not you have taken a driver-training course that your insurance company recognizes, and driving convictions (such as: speeding and impaired or careless driving).
Generally, your first minor conviction will have little or no impact on your rates. But if you have had a second minor conviction in the last three years, it will most likely affect your premium. If you have had accidents where you are more than 25 per cent at-fault over the last six years2, or a number of minor driving convictions or even one major or serious conviction over the last three years, your premium will be higher. Likewise, the better your driving record, the lower your premium will be.
How much you drive: Your auto insurance premium will also be affected by how much you drive. This is because the more time you spend on the road, the higher the chances of becoming involved in an accident. In urban areas, driving to work may include driving to a subway, bus, or train station. If you live close to work, you will probably have a lower premium than someone who lives far from work or who needs to use his or her vehicle for business.
Where you live: Auto insurance rates are generally higher in larger urban centres. This is because there are a greater number of vehicles on the road, and the chances of getting into an accident are higher. Also, more vehicles are stolen in urban areas.
Your age: In general, mature drivers have fewer accidents than younger drivers, particularly teenagers. Drivers who are 25 years of age and over can generally buy insurance at a considerably lower cost than younger drivers.
2. The Amount of Coverage You Purchase
Many people buy additional protection beyond the mandatory coverage. For example, if you buy optional Collision Coverage, which protects you for damage to your vehicle regardless of who caused the accident, or Comprehensive Coverage, which protects you against theft, vandalism, hail, or explosion, your vehicle will, be covered against any such incidences, but you will pay more.
There are also other options, such as increasing your Third-Party Liability protection or increasing your Standard Accident Benefits Coverage. These options give you more choice and flexibility over your coverages that will allow you to customize your policy to better suit your needs. All of these optional coverages will have an effect on the cost of your policy.
Discuss your options and costs with your agent or broker.
3. Your Deductible
Your deductible is the portion of a loss that you are required to pay. Your deductible can vary, depending on the type of coverage you have and the percentage of fault you are assigned in the event of an accident. There are deductibles for Collision or Upset, Comprehensive, All Perils, and Specified Perils Coverages.
For example, by having a higher deductible of $500, instead of $300, on Comprehensive Coverage, you can save about 10 per cent off your Comprehensive premium.
These savings are due to the fact that higher deductibles mean you pay more towards the cost of repairing your vehicle, while your insurance company pays less toward the total cost of repair. As a result, your premium will be lower.
If you’d rather have lower deductibles, you may be able to do so if you meet certain conditions and if your company offers them, but your premium will be higher. (Recognize, however, that since Collision or Upset and Comprehensive are both optional coverages, your insurance company may obligate you to carry higher deductibles if you have had a lot of prior claims.)
If you have an older vehicle, you may choose to reduce your premium further by dropping Collision or Upset and Comprehensive Coverages entirely.
4. The Insurance Company You Choose
Auto insurance premiums for the exact same coverage can vary substantially from insurance company to insurance company.
Financial factors unique to each insurance company will contribute to the amount each company will charge you for auto insurance. This is why it is important to shop around!
Insurance works according to a “pooling” concept. You are one member of the risk group in the company you select as your insurer. Your company charges premiums based on the claims experience of the entire group. If an insurance company’s claims experience for a particular risk group is significantly higher than another insurance company’s, its insurance premiums will be higher.
As an insurance shopper, you should check with your insurance company, agent, or broker about possible discounts that may be applicable to you, such as:
Driver Training Discount: Most companies offer a discount or a reduced premium for new drivers who have completed a recognized driver-training program.
Group Discount or Group Rates: If you belong to an eligible group, check to see if it offers group rates. An eligible group may include employees of the same employer, members of a union or professional or occupational association, or certain non-profit associations.
Multi-Policy Discount: Some insurance companies offer a discount if you purchase your vehicle and home insurance from the same company. This discount can range from 3 to 15 per cent.
Multi-Vehicle Discount: You may be able to get a discount if you insure more than one vehicle with the same insurance company. The multi-vehicle discount can range from 5 to 15 per cent.
Renewal Discount: Your company may offer you a renewal discount if you have been with the company for a certain number of years without an at-fault accident. The discount can range from 5 to 20 per cent.
Retiree Discount: If you are retired and meet certain conditions, you may be able to get a retiree discount on your premium. The retiree discount can range from 5 to 15 per cent off your premium for Accident Benefits coverage.
Winter Tires Discount: Some insurance companies offer a discount if you install winter tires on your vehicle during the winter months.
Other Discounts: Your premium may be reduced further if your yearly mileage is low or if you have an alarm in your vehicle. Also note, drivers who progress through the graduated licensing system should receive a rate reduction of 10 per cent on all coverages, provided that the driver has had no chargeable convictions or at-fault accidents when entering into Level Two (Class G2 licence). This reduction is applicable for 1 year. Similarly, a driver should receive a 10 per cent rate reduction on all coverages when the driver becomes fully licensed (Class G license), provided that the driver has had no chargeable convictions or at-fault accidents during Level Two. This reduction is also applicable for one year.
Each company applies discounts differently. Check with your broker, agent or insurance company to find out what discounts are available to you.
If you own a vehicle in Ontario, you are required to, at the very least, purchase the following automobile insurance coverage:
Third-Party Liability Coverage:
This section of your automobile insuinsurance policy protects you if someone else is killed or injured, or their property is damaged. It will pay for claims as a result of lawsuits against you up to the limit of your coverage, and will pay the costs of settling the claims. By law you must carry a minimum of $200,000 in Third-Party Liability coverage.
Statutory Accident Benefits Coverage:
This section of your automobile insuinsurance policy provides you with benefits if you are injured in an automobile accident, regardless of who caused the accident including supplementary medical, rehabilitation, attendant care, caregiver, non-earner and income replacement benefits.
Direct Compensation – Property Damage (DC-PD) Coverage:
This section of your automobile insuinsurance policy covers damage to your vehicle or its contents, and for loss of use of your vehicle or its contents, to the extent that another person was at fault for the accident. It is called direct compensation because even though someone else causes the damage, you collect directly from your own insurer, instead of the person who caused the damage.
- the accident took place in Ontario;
- there was at least one other vehicle involved in the accident; and
- at least one of the other vehicles is also insured by an insurance company that is licensed in Ontario or has signed a special agreement with FSCO to provide this coverage.
If these conditions are not met, then you can make a claim on your optional Collision coverage (if you have it), whether or not you are at fault. If you don’t have Collisioncoverage, you may be able to pursue recovery from the at-fault driver to the extent you were not-at-fault for the accident.
Uninsured Automobile Coverage:
Protects you and your family if you are injured or killed by a hit-and-run driver or by an uninsured motorist. It also covers damage to your vehicle caused by an identified uninsured driver.
Most payments for damage to your home is based on replacement cost value. Loss or damage to contents may be handled this way as well. If so, you are required to actually replace the contents. An alternative would be to take a cash settlement. However, this would be based on the actual cash value of the contents at the time of loss.