Canadian Auto Insurance Facts
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Qualifying For Discounts: A Quick Way To Lower Your Car Insurance Rates
08 days
Auto insurance companies have known for years that certain behaviors exhibited by drivers lead to fewer claims and less risk of insurance loss. In an effort to encourage such behaviors, insurers reward their policyholders with discounts. These discounts offer one of the easiest methods for lowering your car insurance rates.
Our goal below is to introduce some of the discounts your auto insurer might offer. Although you’ll be familiar with many of them, some may be new to you. It’s important to realize that every car insurance company is different, and thus it pays to shop around for the lowest rates.
Discounts Earned By Your Actions
One of the most important factors in calculating your rates is your driving record. Your record has substantial predictive value to insurers. It helps them to gauge the likelihood that you will cause an at-fault accident sometime in the future. Given its weight, it should not be surprising that most insurers offer a discount for maintaining a clean record. If you manage to steer clear of tickets, convictions, and at-fault accidents, you’ll qualify for a rate reduction.
You can also earn a discount by limiting the number of miles you drive. The more you drive, the more likely you are to be involved in an accident. For this reason, most insurance companies extend a low-mileage discount to their policyholders.
If you have recently received your driver’s license, consider enrolling into a driver education course. These courses teach enrollees to drive safely, whether in the presence of aggressive drivers or during poor weather. Graduating from this type of course indicates to your insurer that you’ll make safe decisions while behind the wheel.
Many companies will also apply a discount to your policy once you reach a certain age (e.g. 65). They do so because older drivers tend to drive less, and thus present a lower risk of future claims.
Discounts Influenced By Your Automobile
The type of car you drive will affect your premiums. Insurers take into account that some vehicles are associated with more frequent and costly claims than others. The reasons vary. Some cars are equipped with fewer safety features; some are more attractive to thieves; and some offer less-responsive steering controls.
Each make and model is assigned a score by the Canadian Loss Experience Automobile Rating (CLEAR) system. If your car is given a low score, which implies a low-risk claims history, your rates will be lower than otherwise.
A lot of insurance companies will lower your premiums if your car is equipped with an alarm system or “kill switch” (to cut the ignition). Such anti-theft features lower the likelihood that your vehicle will be stolen.
Anti-lock brakes and air bags may also cause your rates to drop. The former help you to stop your car more quickly, which reduces the risk that you’ll cause an accident. The latter reduces the risk that you or your passengers will sustain serious injuries during an accident.
Discounts Related To Your Insurance Policy
Insurers also extend discounts to policyholders who agree to bundle their policies. For example, if you carry your auto insurance coverages with one company and your property insurance with another, you’ll enjoy a rate reduction for consolidating them under a single company. This is also the case if you have more than one vehicle, and each is covered by an individual policy. Placing them on a single policy is usually less expensive.
You can also save money by paying your premiums on an annual basis. Many people pay monthly, and as a result are required to pay a small administrative fee ($5 to $10) each month. During the course of a year, this can add up to over $100 in extra fees on a single policy.
The deductibles on your coverages provide another opportunity to lower your rates. By raising them, you’ll reduce your insurer’s risk of loss in the event you file a future claim.
One of the best ways to enjoy a discount on your car insurance rates is to compare quotes from other insurers whenever your policy is about to expire. You may be able to save hundreds of dollars each year by shopping around.
Alberta Auto Insurance Myths
029 days
by admin
in Uncategorized
To many people, auto insurance can seem really complicated, especially with the wealth of myths and misconceptions about how it works. More often than not, it is these myths and misconceptions that wind up making you lose out in the end. The following is a list of the most popular myths about auto insurance along with the reality that lies behind each one.
Myth: It is more expensive to insure a red car.
Whether the car is black, beige, taupe, red, silver or a unique mixture of that embedded with some flame decals, the same make and model of a car with a varying colour will have the same rate; the colour that your car is has no bearing on the rates. The only things that do affect the rate of your auto insurance is its year, model, make, engine size, body type, the drivers on the policy and the age of the vehicle.
Myth: It is pointless to shop around for auto insurance if you are under the age of 25.
No matter how old you are, shopping around for your auto insurance can save you a great deal of money. Indeed, younger drivers must face the problem of having to pay for a higher rate of insurance, it can still make a significant impact on your monthly payment if you elect to shop around. There are usually different rates for drivers over the age of 25, but your premium ultimately depends on your driving record besides your age.
Myth: If you use your car for work, your employer’s insurance has your back.
Your policy affects the personal use of your car rather than commercial use. This means if you use your car for a courier job or a delivery task, you will not receive coverage from your employer’s insurance. Though you may receive a reimbursement for your mileage costs, you will not wind up having coverage if you get into an accident while on the job.
Myth: If you get into an accident, your rate will increase.
While possible, this is not necessarily true. If you cause the accident, then your rate is directly affect. However, you should also note that if you do wind up with a rate increase, your accident may not necessarily be the cause. Keep in mind that insurance rates are typically adjusted to keep up with your situation, which includes the number of claims in your neighbourhood, inflation, the statistics for accidents with others who drive your kind of car as well as other factors.
Myth: A friend who wrecks your car can cover it with his insurance.
Actually, remember that his insurance covers his car, and your insurance covers your car. To make it simple, consider your insurance to be a part on your car. That is, if you lend someone the keys to the car, you are also lending them your insurance. Remember this and consider the way your premium will be affected in the event of an accident. This also means you could be financially responsible if they wreck your car.
Myth: Auto insurance rates are not regulated, so companies can charge you anything.
Contrary to popular belief, rates for auto insurance are actually very strictly regulated. With the exception of Quebec, the law in all provinces states that insurers are required to submit their rates for approval to government agencies. These regulators will then review how the insurers are determining their rates and then ultimately decide whether or not it seems fair. After filing the rates with these entities, it is impossible to change them until the next filing comes around.
Myth: My rates will be the same as the rates my neighbour gets.
As it was previously stated, there are numerous factors that determine your rate: your neighbour isn’t one of them. Factors that determine your rates include age, the type of vehicle and your driving record. As all situations are unique, your rates will vary.
Myth: Drivers in all sorts of situations are covered under “comprehensive” coverage.
Indeed, comprehensive coverage is just one sort of protection that is available on a policy — with the others being Uninsured Motorist, Collison, etc. However, this type of coverage will only pay for damages incurred outside of a collision.
Quebec Car Insurance Myths
040 days
by admin
in Uncategorized
A Red Car Costs More to Insure
The first myth that a red car is more expensive to insure than that of another colour has not been found to be true. So many things go into determining a person’s car insurance rates, and the vehicle is part of the equation but colour is not. For example, car insurance companies are interested in the make and model of the car, how many miles are driven, where the car is parked and driven and also whether the car has anti-theft devices. If the vehicle has features that make it safer to drive such as anti-lock brakes, the car’s owner will receive lower rates, even if the car is red.
Parking Tickets Increase Car Insurance Rates
Some people have several parking tickets, and they worry that their car insurance rates will be affected by them. These people can stop worrying because parking tickets do not affect car insurance rates at all. On the other hand, tickets for moving violations, such as speeding tickets, do have a negative affect on car insurance rates. Parking tickets may indirectly affect car insurance rates because failing to pay them makes it difficult for people to renew their driver’s licenses.
Speeding Tickets for Slower Speeds Are Not As Bad As Those for Higher Speeds
Drivers have a belief that if their second speeding ticket is for driving 5 kph over the speed limit, this is not going to affect their rates because their first speeding ticket was for driving 10 kph over the speed limit. It depends on when these tickets were received. If the first ticket was from five years ago, the insurance company may not raise the rates for the second ticket, but if these tickets were received within one year of each other, the auto insurance company will often place these drivers in a higher risk category and charge higher rates.
Drivers Not Criminally At Fault in An Accident Don’t Have to Pay Their Deductibles
Drivers who have not been determined to be criminally at fault during a car collision believe that they will not be obligated to pay their deductibles, but this may not be the case. People can be found not to be criminally negligent but at the same time were the cause of the accident, so they will be required to pay their deductibles. If the other driver is eventually found to be the one who caused the accident, the driver not at fault will receive a refund.
An “Act of God” Is Not Covered
Policy holders are often confused about the wording, “act of God.” They often believe that damages caused by an act of God will not be paid by the car insurance company. The truth is that if a car is damaged by a particularly treacherous storm, these damages are covered by the car insurance policy. The confusion results because the words “act of God” are not present in the car insurance policy, so when people are reading over their policies to find out if damage caused by a flood is covered, they will need to look for the actual word “flood.”
Comparing Quotes Doesn’t Help Someone Under 25
Some people believe that seeking quotes from more than one car insurance company will not result in lower rates for people under the age of 25. This actually isn’t true either. People under age 25 can find a better deal just by seeking quotes from several companies. While one company may charge younger drivers more for their premiums, another may offer a break for a younger driver who has not had any accidents or tickets. The chance younger drivers have for finding lower rates is large enough to make comparing several quotes worthwhile.
The Employer’s Insurance Policy Covers the Employees
A very important myth that people must understand is a myth is that an employer’s car insurance policy covers the employees’ vehicles when they are in the process of performing their work duties. This myth is also untrue. Furthermore, when people are driving their vehicles for their jobs, they are not covered by their own personal car insurance policies. They would need to have a commercial auto insurance policy to be covered while they are in the process of making deliveries.
Ontario Car Insurance Myths
050 days
by admin
in Uncategorized
Some drivers believe some pretty amazing myths about their car insurance coverage. These stories get started through casual conversations where no one stops to validate certain statements that are made by well-meaning experts. Insurance companies are regulated very closely to make certain that drivers are insured against loss according to the written policy documentation provided from the insurer. Residents in Ontario can rest assured that the following myths have no basis in fact, and understanding this fact might make it easier to sleep at night.
- Car price – The actual price paid for the vehicle does not impact the premium charged by the insurance company. All insurance premiums are determined by the cost of parts and labour required to repair a vehicle. Very expensive vehicles will require higher premiums than common cars.
- Certain car colours – People who own red cars, or other bright colours, are not charged higher insurance premiums. The colour of the vehicle is not considered in the computation of insurance premiums.
- Owned, financed or leased – Regardless of the ownership agreement, the cost of insurance is not affected.
- Specific damage – Regardless of the extent of damage to the vehicle, the premium paid by the driver is not affected. Minor windshield cracks are viewed the same way a comprehensive claim is by the insurance company. Restoring the vehicle premium condition is within the terms of the insurance agreement.
- Driver fault – If the other driver is at fault, the insurance company will not increase the insurance premium. Even when the insurance company must pay to repair the vehicle, insurance rates will not increase when another driver is at fault.
- Unmade claims – A driver that does not file a claim following an accident, will incur a premium increase if the accident that caused the damage was the fault of the driver. Police reports are provided to insurance companies so the driver is identified and notes are made in the policy file.
- Traffic tickets – When a driver goes to court and the judge drops the point penalty, the ticket will still be reported on the driver’s record. Any moving violations remain on the record for three years from the court date. When the driver pays a fine, the insurance company will consider this act as an admission of offence.
- Police opinion of fault – Insurance companies will not always agree with the assignment of fault determined at the scene of the accident. When detailed police reports are provided, the insurance company can deny the claim and pursue a different determination. One standard example is when a car slides in poor weather and hits a stationary object. The police might not ticket the driver, but the insurance company will assign fault for the damage to the driver.
- Weather – Ontario drivers must realize that all accidents that involve one vehicle are considered the fault of the driver. An insurance company assigns responsibility for damage sustained by another person’s property to be the fault of the driver behind the wheel of the moving vehicle. When thousands of other drivers are able to reach their destination safely in the same storm, the insurer will assign fault to the driver that skids and hits a pole.
- Minor claims – The number of claims paid on a given policy will determine the impact on the premium charged when the policy is renewed. Minor claims against the policy will have the same impact as significant repair claims. If the car has been damaged in multiple incidents where the driver was not at fault for any of them, the premium charged by the insurance company might not increase very much in the new term.
- License class – When drivers take additional training to qualify for a Class B, F, D or A driver’s license, the insurance company does not adjust the premiums charged for insuring the vehicle. All insurance rates charged in Ontario are based on the G2 or G license class.
Every driver should verify the facts concerning their car insurance coverage to prevent bad decisions. Paying claims to repair the vehicle is part of the insurance company’s role when car insurance policies have been kept in force without any lapses in coverage. While some claims are denied because of extenuating circumstances, most legitimate claims are paid according to the terms stated in the policy documentation. Policy limits must be set at appropriate levels to prevent a situation where the car is underinsured. Wise drivers will conduct an annual car insurance review with their agent to verify the coverage and remove any old vehicles from the policy.
The History of Car Insurance in Canada
075 days
Insuring against loss can be traced back to ancient times when Babylonians established the famous Code of Hammurabi, circa 1750 B.C., which was practiced by early Mediterranean sailing merchants. If a merchant took out a loan to finance his shipment, he paid an additional amount to the lender in exchange for a cancellation guarantee from the lender to mitigate the risk of the theft of the shipment.Marine insurance grew in prevalence in the 17th century A.D. as Mr. Edward Lloyd ran a coffee house that became a central gathering place for merchants, ship captains and ship owners. Parties who needed to insure their ships and cargoes and the parties willing to insure their ventures. Today, Lloyd’s of London is the best known insurer for the marine industry and many other types of insurance specialties, which utilize a very different set of rules than standard insurance.
Insurance Mysteries Revealed
Modern insurance policies follow similar concepts of spreading the risk of loss across a large pool of people with similar levels of risk. Every policyholder pays a premium amount that is based on the probability they will make a claim. The pool of people making payments is much larger than the projected number of people who will make claims during the year the pool exists.
A striking example of this concept was an ice storm that occurred across parts of Quebec, Ontario and New Brunswick in 1998. From the one event, approximately 700,000 claims were generated, which totaled $1.4 billion.
Second Layer of Insurance
The financial impact on insurance companies is substantial, but there is another layer of protection for the companies, which is called reinsurance. Insurers participate in this type of insurance that spreads their risk across multiple companies with similar levels of risk. When very large events occur, the reinsured insurance company relies on their additional layer of insurance protection to handle the costs of claims made by their policyholders.
Annual Refresh
Each year, insurance companies evaluate the costs sustained by each of the insurance pools that existed in the previous fiscal year. Very expensive pools are broken apart and spread across other pools. This practice prevents claim expense from overwhelming the insurance company.
Premium Calculation Methods
Car insurance premiums are calculated based on the actual repair statistics for the make and model of the vehicle and the driver profile. Even if a driver with a poor driving record has not made a claim, that specific driver is grouped with other higher-risk drivers, and they are charged higher annual auto insurance premiums. Insurers cannot target individuals for a certain annual premium amount. An entire class of policyholders must be created to mitigate the risk of loss that the pool might incur.
Breakdown of the Canadian Insurance Dollar
Based on a seven-year national average calculated between 2004 and 2010, every Canadian dollar of insurance premium is used in the following ways:
• Claim payments – 53.1 cents
• Government taxes – 15.9 cents
• Operating and regulatory costs – 20.5 cents
• Profit – 10.5 cents
Insurance Covers Certain Losses
All policyholders must realize that the documentation that accompanies the policy states exactly what is covered by the insurance policy. Dollar limits in each major insurance component will determine how much money is paid for a single claim. Drivers who choose to carry liability coverage only will pay all repair or replacement costs after an accident or natural disaster causes damage to the insured vehicle.
Canadian Car Insurance
Each provincial government determines which coverage components that must be carried by every driver to comply with minimum insurance requirements. Accident coverage is mandatory in every Canadian province except Labrador and Newfoundland. The no-fault insurance model is followed in some form in each province with the difference being the extent to which no-fault or tort is emphasized.
Private companies sell auto insurance policies in each of the three Canadian territories and all ten provinces. Government-run insurance companies provide basic car insurance coverage in Manitoba, Saskatchewan and British Columbia, which includes injury coverage for the driver and passengers.
Auto insurers are closely regulated through a strict framework of laws that are written by each provincial government. All companies are supervised by various government agencies, including the rate review boards in the provinces. Provincial and federal regulators monitor the activities of all insurance companies and their handling of claims.
Car insurance policy choices can be tailored to the driver’s specific needs, so insurance coverage will vary between car owners. Deductibles, coverage limits and optional coverage types are set for each individual. The insurer will determine the annual premium for each policy based on the coverage included.
Car Insurance by Canadian Province
Alberta
Seventy private car insurance companies compete for the business of drivers throughout Alberta. By law, every driver must carry a minimum amount of insurance and companies offer many additional types of coverage to suit each driver’s specific needs. Insurance coverage will pay to repair damaged vehicles and compensate injured people involved in the accident.
The provincial government in Alberta has written laws that require certain mandatory benefits that must be included in every auto insurance product offered by the insurers. Drivers must address the challenge of selecting a balance between the best price and sufficient coverage. Recent updates to the auto insurance system in Alberta have improved the balance between coverage and affordability.
Prices on auto insurance in Alberta have been lowered because of the legislation that was written in 2004. The intent of making these changes was to make insurance more affordable, particularly for young drivers with good driving records.
A cap on the amount of money awarded for pain and suffering has been set at $4,504. An objective third party determines which injuries are deemed minor, and the limit does not apply to rehabilitation costs or income replacement. There was a recent court case filed in the Court of Appeal of Alberta that claimed the cap is discriminatory, but the case dismissed the argument. Prior to the implementation of this law, strains and sprains could yield a court award of $20,000 or even $50,000. This fact caused premiums to escalate year after year.
British Columbia
The Insurance Corporation of British Columbia, or ICBC, is a government-run insurance company that provides car insurance in British Columbia. Auto insurance consumers in B.C. have had little choice concerning their car insurance since ICBC was established in 1973. Policyholders do not have the option to switch insurance companies if they become dissatisfied with the service provided. Optional car insurance choices are similar to those of other Canadians because they can carry collision, theft and fire insurance offered by other private auto insurers who compete for the business of B.C. drivers.
Auto insurance consumers in British Columbia struggle against government inaction. Their fellow Canadians receive better insurance coverage from insurance companies that must provide product innovations like replacement cost coverage, first accident forgiveness, payment plans and roadside assistance. In 2001, the B.C. provincial government committed to increase auto insurance competition and submit to a lengthy investigation of the mandate provided for ICBC’s operation. The results of the investigation did not result in a completely competitive insurance market for consumers in British Columbia, and drivers must continue to buy the mandatory portion of the auto insurance from ICBC.
Manitoba
In 1971, a government-run insurance company called Manitoba Public Insurance, or MPI, was established to provide auto insurance coverage for drivers in Manitoba. Choices for Manitoba drivers are minimal because they do not have the choice to switch insurance companies if they are not happy with the service provided by MPI. All of Manitoba follows a “pure” version of the no-fault insurance model. If injuries are sustained in a car accident, the court will award a standard, pre-established set of monetary benefits provided through the government-run insurer. A lawsuit to pursue additional monetary compensation is not possible.
Newfoundland and Labrador
Fifty private companies provide auto insurance policies for drivers in Newfoundland and Labrador. Provincial law requires that all drivers carry a minimum amount of insurance.
Previous to 2004, the insurance premiums in Newfoundland and Labrador were rising each year because of the large court awards provided to anyone who sustained a minor injury in a car accident. The provincial government passed legislation in 2004 to establish a $2,500 deductible on pain and suffering court awards. The impact of this legislation did not yield the long-term cost control realized by other Atlantic Provinces that passed a $2,500 cap, instead of a deductible.
New Brunswick
More than 65 private car insurance companies compete for the business of drivers in the Canadian province of New Brunswick. Every driver must carry minimum levels of insurance and the companies compete to offer the additional auto insurance coverage that will suit each driver’s individual needs.
Early in 2001, the provincial government was receiving complaints from citizens who were having trouble finding affordable insurance coverage. Efforts began to determine the cause, and in 2003, a $2,500 cap on awards for “pain and suffering” was established for anyone who sustained a minor, non-permanent injury in a car accident. Establishment of this cap has controlled the cost of claims, but does not affect the funds available for medical care or replacement of income.
In 2005, the First Chance premium discount was introduced to offer new drivers, who have a clean driving record, the chance to pay comparable rates as those paid by experienced drivers with clean records. If the young driver receives a traffic-related citation or causes an accident, their rates would revert to those charged to their peers with similar driving records.
Northwest Territories
Private insurance companies compete for the business of drivers in the Northwest Territories. All drivers must carry minimum levels of insurance to comply with provincial law.
Ontario
More than 140 private insurance companies offer auto insurance to drivers in Ontario. All drivers in Ontario must carry minimum levels of coverage to protect themselves against loss related to property damage or personal injury.
In June 2010, IBC and the Coalition Representing Health Professionals in Auto Insurance Reform began working with insurers and health professionals understand the needs of claimants set forth under the new auto insurance rules.
Nova Scotia
Sixty private companies compete for the business of drivers in Nova Scotia. All drivers must carry minimum levels of insurance to be in compliance with Nova Scotia provincial law. In 2003, a $2,500 cap on minor injury awards was implemented in Nova Scotia to slow the increase of car insurance premiums. Along with other Atlantic Provinces, Nova Scotia experienced reduced costs without impacting the funds available for medical expenses or lost income experienced by policyholders.
Prince Edward Island
Fifty companies compete to provide auto insurance coverage for the people who live on Prince Edward Island. All drivers must carry minimum levels of auto insurance coverage to comply with provincial law.
In April 2004, Prince Edward Island, along with the other Atlantic Provinces, adopted a $2,500 cap on the awards provided by the courts for minor injuries. When awards were provided for every minor injury, drivers were experiencing skyrocketing auto insurance premiums. The cost reductions realized have made insurance more affordable for all drivers without reducing the funds available to pay medical expenses and replace lost income for policyholders.
Quebec
All auto insurance in Quebec is provided through a combination of private insurers and a government insurer. Personal injuries are covered by the government insurer while property damage is insured by the private insurance companies.
A pure no-fault system is followed in Quebec for all bodily injury cases. Anyone injured in an automobile accident receives a predetermined award and has no right to sue for additional economic or medical expenses or compensation for pain and suffering.
More than 100 private insurance companies provide the property insurance required by the provincial governmental laws. All drivers are required to carry sufficient coverage against loss, which must include a minimum amount of third-part liability insurance.
Saskatchewan
In 1945, Saskatchewan Government Insurance, or SGI, was established to provide drivers in the province with the required auto insurance coverage. Residents do have a choice between following the no-fault insurance model offered by Saskatchewan or opting to follow the tort system that was made available to them in January 2003. Only .05 percent of the population, or 500 residents, have chosen the tort system option.
Yukon
Private insurance companies provide auto insurance coverage to anyone who wishes to drive in compliance with Yukon provincial law. Every driver must carry minimum insurance coverage for property damage, physical injury and liability.
FinalThoughts
Canada has a rich history of auto insurance laws that have been focused on making insurance more affordable for drivers of all ages. Each driver is given choices based on the province in which he lives, and drivers do have a voice when insurance entities are raising rates too quickly.