The Beginner’s Guide to Auto Insurance

Jul 26, 2019

How well do you understand your auto insurance? For most of us, the only time we think about what goes into our auto insurance is when we need to renew it or make a claim, and though these are important, it’s also important to understand what you’re covered for whenever you set out on the road. Whether you’re purchasing your first vehicle this summer or planning an epic cross country trip in your car, it’s a good idea to get up to speed on what’s you might be responsible for in the case of an accident or collision. Here’s a handy guide to get you started


Why Do I Need Car Insurance?

IFirst and foremost, auto insurance is a legal requirement to drive in Alberta, and you need it whether you own, lease, or finance your vehicle. While having auto insurance keeps you out of legal trouble, it also protects you in the case of a collision, theft, or vandalism of your vehicle. There are so many things that can happen on the road, whether you’re on your daily commute or out for a weekend drive to the Rockies, so it’s important that you’re covered in case anything happens to you, your passengers, your fellow drivers, and anyone involved in a potential collision.


What Kind of Coverage Do I Need?

 In Canada, each province has its own requirements for insurance, and in Alberta, all drivers must have a basic level of insurance. Fortunately, all drivers qualify for these basic insurance types under Alberta’s All Comers Rule, which allows for anyone with any type of driving experience to purchase coverage and drive in the province.

The basic level of insurance includes:

  • Third Party Liability Coverage: This type of insurance covers damage caused by your vehicle. Over 98% of vehicles in Alberta have over $1,000,000 in coverage, but getting $2,000,000 is recommended.
  • Accident Benefits: : In addition to vehicle damage, accident benefits provides coverage for medical, rehabilitation, funeral costs, death benefits, and loss of income.

 On top of these basic coverages, you can also purchase optional auto insurance for your specific needs:

  • Collision Coverage: Repairs to your car if it’s involved in an accident or is damaged is covered through collision coverage. It pays for repair and replacement costs, regardless who is at fault. It’s also there for when you’re in a single vehicle accident, like slipping into a ditch or sliding into a barricade in the winter.
  • Comprehensive Coverage: Any damage to your vehicle, aside from when it’s involved in a collision, is covered by comprehensive coverage. This generally covers damage your vehicle receives when it is parked and includes damage caused by theft, fire, vandalism, weather events, and other non-accident events.
  • Specified Perils Coverage: More limited than comprehensive coverage, specified perils coverage is exactly what it sounds like—coverage for specific events that happen to your vehicle. Only those named events will be covered by your policy, and damage from vandalism is only covered by comprehensive coverage.

What’s in a Deductible?

A deductible is the amount of money you will pay out of pocket before your insurer will cover the rest of your claim. If you choose to purchase collision coverage, comprehensive coverage, or both, you will have a deductible payable under each of these two options. While you generally have to pay a deductible when making a claim, it’s important to know that there are cases where a deductible is not applicable, such as a claim for fire or total theft loss under a comprehensive policy.

When you choose the amount of deductible you pay when you select your policy, it’s important to know that the cost of the comprehensive and collision coverage will be affected by how much deductible you pay. In general, the more you pay out of pocket through your deductible, the lower your cost of insurance.

Looking for insurance for your vehicle? Get your quick quote started today. If you’re not sure what type of insurance to get for your car, speak to one of our experienced brokers to learn more about your options and let us help you shop around for the best rates.

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