Auto Insurance FAQ (Frequently Asked Questions)

hird-Party Liability: Definition

Third-Party Liability Coverage is a part of the insurance policy that covers the cases when you as a driver either damage somebody’s property or cause somebody’s injuries or death and have to deal with legal responsibility. 3rd Party Liability Coverage is mandatory in Canada and its minimum is $200,000. You are not allowed to operate a vehicle without this insurance coverage.

How Much Liability Do I Need?

Though $200,000 appears like a significant amount, it is highly recommended to increase this limit up to $1,000,000 or $2,000,000. Legal costs and consequences of an accident on a road can be devastating and so the associated expenses.

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• Discover the lowest auto insurance rate across numerous insurance companies
• Spend 15 min to start saving hundreds of dollars annually

Third-Party Liability: Definition

Third-Party Liability Coverage is a part of the insurance policy that covers the cases when you as a driver either damage somebody’s property or cause somebody’s injuries or death and have to deal with legal responsibility. 3rd Party Liability Coverage is mandatory in Canada and its minimum is $200,000. You are not allowed to operate a vehicle without this insurance coverage.

How Much Liability Do I Need?

Though $200,000 appears like a significant amount, it is highly recommended to increase this limit up to $1,000,000 or $2,000,000. Legal costs and consequences of an accident on a road can be devastating and so the associated expenses.

• Interested to save on your auto insurance? Get a free quote today
• Discover the lowest auto insurance rate across numerous insurance companies
• Spend 15 min to start saving hundreds of dollars annually

Getting a ticket typically leads to a premium increase but how far? According to InsurEye analysis, Ontario drivers who have a maximum of 2 violations in the last 3 years pay approximately 20-25% more than drivers with a clean driving record. To illustrate the potential increase in rates, let’s assume a driver is spending $150 monthly on auto insurance premiums.  If the driver falls into the 2 violation category, add 25% and they will pay up to an extra $37 each month, adding up to ~$450 annually.  Should the driving record worsen with more violations, there is a great chance that the auto insurance cost will further increase.

Once you collect a few tickets or commit bigger offenses e.g. Driving Under Influence or Hit-and-Run accident, you can very quickly slide into a category of High-Risk Drivers which will make it really difficult for you to get an insurance policy or it will be connected with exorbitant auto insurance rates. Drive safely!

• Interested to save on your auto insurance? Get a free quote today
• Discover the lowest auto insurance rate across numerous insurance companies
• Spend 15 min to start saving hundreds of dollars annually

Rental Car Insurance: Definition

Rental Car Insurance that is offered in the office of a rental car company is actually a Collision Damage Waiver (CDW) or it is also called Loss Damage Waiver (LDW). It is a particular type of insurance that typically covers a damage / loss should an accident occur. Typically an auto rental company charges you about $20 per day for this insurance (which is not really cheap). There are couple things that you want to understand when getting this insurance:

1. What’s covered – is that only damages to a vehicle or 3rd party liability is covered as well?

2. What  are coverage limits – often these limits can be low (e.g. minimal limit required by law) whereas accidents with bodily injuries can add up to huge amounts?

3. What are exclusions – e.g. some Collision Damage Wiavers may not cover driving on unpaved roads?

Your Auto Insurance and Collision Damage Waiver

Getting a Collision Damage Waiver is definitely better than not having insurance at all but there is often a better alternative: Your own Auto Insurance. Many providers offer so called additional pieces of protection (also called riders) which will also protect your rental car. That may cost you only additional $30 per year on top of your usual premiums.

One additional word on credit cards rental car insurance. In fact, it is a Collision Damage Waiver for Rental Cars. An important thing to know about it is that it does not cover 3rd party liability and your personal injuries. Also in order to use it you need to pay your rental car with this credit card and decline a collision damage waiver offered by an auto rental company. This insurance is typically limited in time (e.g. not longer than 48 consecutive days). If you have a non-standard car (e.g. very expensive rental or cargo vans, pick up cars etc – these might be not covered) you need to check if your card’s insurance cover them. Due to many aspects of that protection that you need to consider, the best approach would be still going with your own car insurance policy extended for rental cars.

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• Discover the lowest auto insurance rate across numerous insurance companies
• Spend 15 min to start saving hundreds of dollars annually

The short answer is it depends. Your  claim may impact your future Auto Insurance Premiums since your insurance company may consider you a higher risk after your claim. It should not be always the case since there are many cases where it does not necessary happen:

• Not-at-fault accident: Typically premiums will not go up if you are not consider to be at-fault (neither fully nor partially)
• Hit-and-Run or Uninsured Motorist Accident: It is also considered a not-at-fault accident that does not lead to premiums increase
• Your policy has Accident Forgiveness Feature embedded into it: It is a guarantee that your policy rate will not increase after the first accident
• Your purchased an additional Rider Accident Forgiveness: It is a similar feature that guarantees that your policy rate will not increase after the first accident but you have chosen to buy it as a separate rider with your policy.

• Interested to save on your auto insurance? Get a free quote today
• Discover the lowest auto insurance rate across numerous insurance companies
• Spend 15 min to start saving hundreds of dollars annually