Before you get behind the wheel of a car in Canada, you had better make sure that you are insured. Every province and territory in the country requires drivers to have insurance, and driving without it is a costly risk, because you could lose your license as a result. Before you buy insurance, however, you need to take the time to do some research to ensure that you get the right type.
The Basic Requirements
The first thing you need to know is what you are required to have. All of the provinces and states require basic liability coverage for their drivers. This is coverage that will pay for damage you cause to someone else or his or her property. For instance, if you are involved in a car accident where you are the at-fault driver, your liability coverage would pay the medical bills and car repair bills for the other people involved in the accident. This is a common requirement in other countries.
Canadian drivers must carry an addition coverage option, because when it comes to car insurance, Canada requires Accident Benefits/Bodily Injury coverage. This coverage will take care of your medical care and any loss of income you experience after a crash, even if you are the one at fault for the injuries. In other words, if you are involved in a motor vehicle accident and no one else is liable for your injuries, this coverage will cover them.
Other Options to Consider
While you are required to have Liability and Accident Benefits/Bodily Injury coverage to drive in Canada, you may wish to have additional coverage. Neither of these Canada insurance options covers damage to your vehicle that is not caused by another vehicle or driver. They also do not cover damage to your vehicle that you caused. Natural causes are also not covered. If a tree branch fell on your car and smashed in the roof, you would be stuck paying for the repair or buying a new car without any car insurance coverage.
If you have a loan on your car, the bank will not be willing to take this risk. You will probably be forced to purchase additional car insurance for as long as you have the loan. The two additional policies that you may have to purchase if you have a loan are Collision and Comprehensive.
Damage to your car in a motor vehicle accident, even if you are completely at fault, would be covered in a Collision policy. In fact, even if you drive the vehicle into something that is not a vehicle, you would be covered with a Collision policy.
Comprehensive insurance covers non-motor-vehicle damage to your car. If your car were stolen, vandalized, or harmed by a natural disaster, this coverage would pay for the damages. That tree branch that fell on your car and smashed the roof would be an event covered by comprehensive coverage.
Considerations When Buying Coverage
When buying insurance coverage, you have to strike a delicate balance between affordable premiums and proper coverage. Some people buy too much insurance, and they end up paying more for their insurance coverage than is worthwhile when compared to the value of their car. Others buy too little insurance and end up with huge bills when they are in an accident.
How can you best determine this balance? You need to know what your car is worth. Check the Blue Book value of the car, and then compare it to the amount you are paying in premiums. If you find that you are paying close to the value in premiums over two or three years, you may wish to drop a coverage option. Put the additional money aside into a savings account, and use that money towards repairs if you end up having an accident. If you do not have an accident, use that money as a down payment on your next car purchase, rather spending thousands on auto insurance that will only provide a few hundred dollars for your vehicle.

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