You have your eye on a new set of wheels and the price is right, but don’t forget there are additional costs involved when it comes to owning a vehicle — most significantly, auto insurance.
In Canada, if you own a car, you must have insurance coverage.
However, shopping for auto insurance can be daunting for newcomers to Canada. There are a variety of insurance providers to choose from depending on your province, and many types of car insurance plans. Although each province will have a minimum level of insurance you are required to have to protect you and other drivers on the road in the case of an accident, there are also optional coverages you can choose to increase your insurance safety net.
Types of insurance
Here is an overview of types of insurance.
Liability coverage protects you if you are in an accident and you’re held legally liable for property damage, injury or death to other people. This coverage is mandatory in Canada, although the minimum amount may vary per province. Liability insurance in Canada also includes coverage to protect you against financial losses you might suffer due to medical expenses or loss of income if you’re injured. This portion of insurance coverage is referred to as “accident benefits.”
Collision coverage covers the damage that can affect your vehicle as a consequence of a crash with another vehicle or object, even if you’re at fault.
Comprehensive coverage insures your car against other types of damage such as vandalism — slashed tires and keying to name just two examples! — theft, fire or flood, and so on.
Loss of use covers your transportation costs (such as a rental car) during the time your vehicle is being repaired or replaced.
Cost of car insurance
Depending on what insurance options you choose, the cost of your car insurance can vary widely. Plus, there are several other variables that can affect the price you pay, including:
The younger you are, the higher your insurance costs will likely be, because younger, more inexperienced drivers will pose a higher risk for accidents. Many insurance providers will offer special road safety discounts after a few years of safe driving.
It’s not just about your age; your record behind the wheel can also impact how much you pay. Insurance providers will look at the number of years you have been licensed and whether or not you have experienced any traffic violations and at-fault collisions during that time. If you have a clean driving record, your premium is going to be lower than if you have experienced a conviction or accident.
Type of car
Even your type of vehicle can affect the cost of your insurance. It’s common sense that newer vehicles will have higher insurance costs than an older vehicle, because the cost of repair or replacement will be higher in the case of an accident. But even the style and colour of your car can impact your final costs; a flashy red sports car with high stealing rates will likely bring with it higher insurance premiums than a family-friendly vehicle with a high safety rating.
How much you drive
How often and how far you drive factor into the cost of car insurance as well. The logic here is simple: the more hours you spend driving, the higher the chance that you will be in a collision. So, if you work near your home, chances are you will pay much less for car insurance compared to someone who commutes to work an hour a day, each way.
The amount of your deductible can also impact your overall insurance costs. Generally, the higher your deductible, the lower your insurance rates.
Generally, auto insurance costs can vary between insurance companies, so it’s a good idea to shop around. Contact a few companies for quotes on their insurance plans before you buy. Some provinces like B.C., Saskatchewan, Manitoba and Quebec have crown corporations serving as the main insurance provider, so comparison shopping is limited in those provinces, although it is possible to get basic coverage through the main provider, but additional coverage through a private insurer.