What Is Covered Under a Car Insurance Policy

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What Does an Auto Insurance Policy Cover? 

An auto insurance policy helps you bear the cost of repair when met with an accident causing damage to your vehicle. It also protects against auto theft and severe damages from vandalism and natural calamities such as fire, downpours or other poor weather conditions. The amount of coverage you’re liable for depends on your policy and premium rate. In Canada, you’re unauthorized to drive a car without auto insurance, and the premiums are decided based on the following factors:

  • Age
  • Gender
  • Geography
  • Car/vehicle model
  • Usage
  • Driving record 
  • Deductible amount

READ MORE: Why Shouldn’t Your Skip Getting Your Car Detailed?

Types of Car Insurance Policies 

Canada’s car insurance policies and coverage are mainly categorized into two broad terms: mandatory and enhanced car insurance coverage.

Mandatory Car Insurance Coverage

  • Liability coverage: Also known as third-party liability coverage. It protects you if you’re held responsible for injuring or causing death to a person in an accident. This coverage pays off the amount to settle a lawsuit. The minimum mandatory third-party coverage is $200,000. 
  • Direct compensation – property damage (DC-PC) coverage: It helps cover damages caused by another person in an accident. You may need to fulfill the additional provincial or insurer conditions to avail yourself benefits of this coverage. For example, if the accident happened in Ontario, the other party needs to be insured by an Ontarian insurance company to get appropriate coverage. 
  • Accident benefits coverage: Irrespective of who caused the accident, you’re liable to get compensation or accident benefits if you get injured. This includes attendant care, rehabilitation, caregiver, supplementary medical and other income replacement benefits. 

Enhanced Car Insurance Coverage 

  • Specified perils coverage: Pays off damage caused by fire, theft, falling objects, explosions, animal impact, poor weather, civil disturbances and other natural occurrences.
  • Collision or Upset coverage: This helps you bear the cost of repairing and replacing your vehicle if it gets damaged in a car accident with another vehicle or object such as a tree or fence. 
  • Comprehensive coverage: It pays for damages listed in specified perils coverage and collision coverage. Please note that comprehensive coverage does not provide medical compensation and damages from another vehicle. 
  • All perils coverage: Along with damages listed in comprehensive and collision coverage, it covers losses incurred when someone steals your vehicle from your home or workplace. 

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