If you have purchased a new car and are looking forward to buying auto Insurance, it’s essential to understand the different car insurance available in the market. The different coverages are designed for auto insurance to protect individuals, their vehicles, and fellow passengers whenever they are involved in a car accident.

If you’re looking for an online insurance quote from the top-rated companies in Canada, feel free to contact a reputable online insurance brokerage today.

Continue reading to learn more about the different insurance types for cars:

1.   Third-party liability coverage

Auto liability coverage is compulsory in every Canadian province. Drivers must buy liability coverage of at least a standard amount, as the law states. The minimum third-party liability amount is $200,000. However, in Quebec, it’s $50,000. This coverage features two components.

• Property damage liability – It helps pay for damage an individual (driver) has caused to a third party’s property.
• Bodily injury liability – It helps the individual (driver) pay for the medical expenses and other costs related to the injuries caused to another person in an accident.

2.   Guaranteed Auto Protection (GAP) insurance

GAP insurance reimburses the insured if the value of the outstanding auto loan is higher than the total loss that occurred to the car. It’s categorized as additional coverage to the standard insurance policy to ensure the policyholder is never in negative equity when writing off the car. You may sign-up for GAP insurance either with your insurer or your dealer.

3.   Rideshare insurance cover

It is one of the unique insurance types for cars designed for individuals who drive for Uber or any ridesharing company. Generally, personal car insurance doesn’t provide cover for “business use” vehicles. So in case you get into a car accident while driving for the company, you may have to bear vehicle repair, medical expenses of the injured person, and other expenses out of your pocket.

Generally, rideshare companies are legally bound to facilitate their drivers with insurance. But, if a driver uses the vehicle for business and personal purposes, it is essential to sign up for additional coverage.

4.   Optional car insurance

Typically, there are fourtypes of insurance for cars that are optional:

• Comprehensive
• Collision
• Specified perils
• And other perils

Comprehensive car insurance

Next on the list of major insurance types for cars is comprehensive car insurance. It protects the individual’s car from risks other than a collision. Say, if your vehicle was vandalized or stolen, comprehensive insurance would save you from significant losses.

Risks covered under comprehensive insurance –

• Vandalism, theft, explosion, fire, earthquake, etc.
• Damage due to weather conditions such as hail, lightning, and windstorm.
• Damage due to flying or falling objects such as a tree fall.

Individuals also benefit from cash settlement for their comprehensive insurance coverage as a total write-off for car repairs.

The insurance providers offer these insurance options as “add-ons. Thoroughly review your specific needs (such as loss of vehicle use, depreciation waiver, accident forgiveness, etc.) before choosing insurance option(s).

Collision insurance

Collision insurance covers the accidental damages done to the car because of a stationary object or due to the hit by a third party’s vehicle. For example, collision insurance comes to the rescue if your vehicle runs into a tree or in case of any other similar incident. This car insurance is optional in almost every Canadian province.

Specified perils

These include protection against specific events that must be included in your policy per your needs. This might include events like:

• Earthquake
• Storms and hurricanes
• Rain, flood and lightning
• Riot or explosion

All perils coverage

This is one of the most comprehensive insurance policies you can buy. It includes the benefits of both comprehensive and collision insurance, along with specifically added perils.

5.   Underinsured or uninsured auto coverage

Uninsured auto coverage helps in paying for the expenses in case your car gets damaged by an uninsured driver. Generally, this coverage is added to the standard insurance policy as a single coverage.

An underinsured driver who has auto liability insurance can sign up for uninsured auto coverage under the following conditions –

• Inadequate liability limits for covering the expenses after an accident
• Liability limits equal to or less than the underinsured insurance coverage value

In simple words, this insurance cover is ideally suitable for a driver who doesn’t have enough insurance to cover damages caused to the property of a third party (if they are guilty of the accident). Note that every state has different rules and regulations for underinsured auto coverage.

6.   Medical payments coverage

Medical payment coverage will help you clear medical bills and expenses due to a car accident. It helps in paying the following expenses for the policyholder and fellow passengers –

• Professional medical services such as nursing
• Expenses incurred for prostheses, surgery, or X-rays
• Medical insurance deductibles
• Medical technician, ambulance fees, and other charges such as hospital or doctor visits
• Medical payments insurance features a coverage limit. It is important to choose the limit widely when purchasing coverage. Any medical bills exceeding the coverage limit will be your responsibility.

Things to keep in mind while purchasing a policy

Here are a few things you must consider before buying an insurance policy.

Cancellation terms

Finding the right car insurance isn’t enough. You may want to renew your insurance with a different insurer or want to give up your insurance. In either case, you need to follow the right procedure for cancelling the car insurance depending on the conditions set by your provider or province. Therefore, it is important to learn about insurance cancellation when buying coverage.

Additional coverage required

Third-party liability insurance is the only mandatory insurance required in Canada. However, it is not enough to financially protect you in case of an accident. Thus, you must get additional coverage. However, you need to weigh in multiple factors before adding other coverages, such as the cost of your car, its age, and your driving and claims history, among others.

Endnote

Car insurance is something you cannot ignore. If you are a novice, it is best to reach out to an experienced insurance brokerage. They will help you choose among the different types of car insurance so that you have adequate coverage according to your needs and budget.

Best of all, they can answer all of your car insurance-related questions, so you don’t have to spend your day searching for answers online.

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