Your guide to buying car insurance (2)

Now let’s review the coverage available to you. We’ll break these down into Required and Optional types.

Required Coverage

The basic, legally mandated coverage that your auto insurance will generally include:

Third-Party Liability

If you injure someone, or damage someone else’s property, and you are sued, liability coverage pays for your legal defence, and, if needed, any damages awarded in a lawsuit against you, up to the limits of your coverage. Obviously, you will be liable for any damages/legal costs above the limit of your coverage if you were found legally liable for a claim. Many Canadians are now choosing to increase their coverage to at least $1 million.

Statutory Accident Benefits

These pay for your medical expenses, and provide you with limited income replacement if you are injured or killed in an accident, irrespective of who was at fault. The benefits also apply if you, or any member of your household, are injured as a pedestrian or cyclist. The differences in accident benefit coverage vary widely from province to province.

Uninsured Automobile Coverage&t;STRONG>

This pays for injury to you or your passengers caused by an uninsured driver or a hit-and-run driver, subject to certain limits. Note, however, that this coverage does not pay for damage that a hit-and-run driver causes to your automobile. That requires optional collision or “all perils” coverage.

Optional Coverage

Coverage that you may want to look into:


This pays to repair or replace your car (note that the insurer will decide which option is more justified financially) if it is damaged in a collision, even if you’re at fault for the accident. It will also pay you if your car is damaged by a driver who is uninsured, or unidentified.


This coverage pays for the repair of damages, or even the replacement of your car, if caused by a variety of non-collision events. These include fire and explosion, windstorm, rising water, hail, lightning, earthquake, falling objects, impact with animals, vandalism and theft (unless perpetrated by a member of your household). You have the option to select “specified perils” coverage instead. This covers only those causes of damage “specified” in the policy, and usually excludes vandalism and windshield damage, such as that caused by flying stones, etc.

Extended Third-Party Liability

This increases your liability coverage from the basic legally mandated amounts (usually $200,000 in all provinces except Quebec) to at least $1 million.

Other endorsements

“Waiver of depreciation” coverage must be purchased when the vehicle is brand new, but is not expensive. It will reimburse you for the full original purchase price of your vehicle if it were to be “written off”, usually during the first 30 months of the life of the vehicle.

“Loss of use” coverage pays for a rental car if your car is being repaired as the result of an accident, and coverage for damage to a rented vehicle.

Make sure you fully discuss your needs with your insurance provider, as coverage varies from province to province. There may be different coverage included with your basic insurance policy, depending on your province of residence. Check also about other options, especially those pertaining to accident benefits.

Be informed. And drive carefully out there!