How Much Auto Insurance Do You Need?: The Top Tips for Choosing the Right Auto Insurance Policy

Posted on May 13, 2019
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The law in Canada requires a driver to have a minimum of $200,000 in third-party auto insurance coverage.

When getting insurance for your car, ensure you go for the best auto insurance policy. As you’ll maybe realize from experience, not all insurance providers respond promptly after an accident.

In addition to the Third Party Liability coverage, there are other mandatory policies you must get. These are:

1. Uninsured Automobile Coverage

This provides cover for injuries you sustain in an accident caused by an uninsured driver. It also covers your passengers injured in the crash. The policy also protects your damaged vehicle, but only if the uninsured driver is at fault.

2. Statutory Accident Benefits Coverage

This is a policy that caters for the medical expenses incurred after an accident. It acts as supplemental coverage to your primary health insurance. In case you don't have a health insurance policy, it covers all your medical costs.  

The policy also caters for a certain percentage of your income per week. This amount is remitted from the first day you miss work after the accident for one year.

3. Direct Compensation- Property Damage Insurance

This policy covers damages you incur when another driver is at fault. It differs from the uninsured automobile coverage in that the driver at fault must have an insurance cover.

The law allows drivers to buy additional covers to enhance their coverage. Other policies you may want to consider are Disability Income Benefit, Funeral Expenses benefits, and Death Benefits.

In choosing the best auto insurance, you need to familiarize with how insurance premiums are calculated. Go for policy providers that sensitize you on additional auto insurance policies available.

How to Find the Best Auto Insurance Policy

Getting the best auto insurance policy is all about value for your money. If you understand what makes a car insurance premium more costly or cheaper, you'll save money on insurance costs. Sometimes, even without claims, your insurance might go up.

It hence helps to understand how to shop for the best price. How then do you arrive at the best auto insurance policy? Let’s have a look.

1. Consider the Kind of Coverage You Need

Before you approach any company for an insurance quote, decide the kind of coverage you need. Keep in mind the mandatory policies and think of the additional ones you'd like to have. Don't be coerced into paying for a plan you don't deem necessary.

On the other hand, keep in mind that once you’re behind the wheel, anything is bound to happen. Think critically how the additional policies would be of benefit in your situation depending on what they cover. As a tip, always ensure you’re covered for an amount about the value of your car.

Here’s what most car insurance policies entail:

I). Liability Coverage

This is a policy that covers you when you’re at fault in an accident. The company compensates the people you cause injuries to, but not those in your car.

II). Bodily Injury Liability

The policy pays for the medical expenses of the people injured in the accident when you’re at fault. You’ll come across policies described as 100/300 policy or 20/50 policy. The first number refers to the maximum dollar amount the company will pay per person.

The other number is the maximum for all injuries sustained by all the occupants of the car you hit. For example, 20/50 means that the insurance will pay up to $20,000 per individual and up to $50,000 for all occupants of the other car.

III). Property Damage Liability

The policy pays for damage caused to the other car if you’re at fault. You should inquire more from your insurer depending on the plan you have.

IV). Personal Injury Protection

The cover is for you and your passengers if you incur medical expenses after an accident. It may also cover lost wages.

V). Collision

The cover caters for repairing your car after an accident. While paying for this policy, ask whether it covers major accidents. Never forget to factor in the worst case scenario.

What would happen if your car is totaled in an accident and needs replacement? Check if the insurance will pay for the replacement.

VI). Comprehensive

The policy covers your car for incidents other than an accident. You’ll get compensation from the company if your vehicle is stolen or damaged by other causes.  

Check if the comprehensive coverage covers you when you get stranded. Since your car is a combination of electrical, mechanical, and rubber parts, it could fail you at any time. Check to see if the insurance caters for towing and rental coverage.

The option might be better than having a separate towing club membership. It'll save you the annual fees associated with the association.

2. Choose a Reliable Insurance Company

When choosing an insurance company, you’d want to consider more than just their premiums. Take the time to research on their financial strength. You may also want to find out how they’ll use your credit score in determining your rate.

Choosing an insurance company can be a lot easier if you get referrals from friends and family. Their experience with how the company works will save you the hustle of trying out different companies.

Types of Insurance Dealers

Car insurance policy providers fall into several categories. It would help to know how they differ from each other.

I). Direct Sellers

These represent the most popular brand names. They sell insurance directly to you without the involvement of traditional insurance agents. The good thing about buying from direct sellers if that there's no commission charged.

Without paying a commission, the savings are passed back to you. Unfortunately, direct sellers only deal with the best drivers. If you have a history of accidents or road violations, you may have a hard time qualifying.

II). Independent Insurance Agents

These have different types of insurance covers from different companies. If you’ve got trouble getting insurance for any reason, talk to agents. They can get you a better deal than what you'd find on your own.  

When dealing with agents, it's always recommendable to get a referral from friends and family.

III). Local National Brands

They differ from direct sellers in that they consider drivers with a blotchy past. Their rates are also much better than those of direct sellers.

Local brands sell through exclusive local agents. This means that the agent doesn’t deal with insurance policies from other insurance companies.

Factors to Consider When Choosing Your Auto Insurer

Identify the type of insurer is one thing but engaging the best is different altogether. Finding a company that'll pay your claims on time is part of finding the best auto insurance policy. Here are the qualities of a good insurer

I). Reliability

You want to deal with a company that you can call at any time after an accident. You also need assurance that they’ll process your claims without taking you round in circles. How do they charge their premiums?

Are their rates reasonable? While state mandates control insurance companies, some may charge way above the average quote price.

II). All-Time Coverage for Your Vehicle

Most small insurance companies provide low rates because they have low overhead costs. Unfortunately, most of these small companies can cause you pain when it comes to paying claims.

This is the time they come up with all sorts of excuses, saying that your claim isn't covered in the policy. That's the last thing you'd want to hear after an accident. If you've faithfully been paying your premiums, you also want to be compensated on time.

As a tip, avoid companies that don’t offer out-of-state coverage.

Staying Within Limits

While having more coverage is advantageous to you, don’t overdo yourself. This is to say that the insurer will try to sell you more policies than necessary. Remember they're in business and some of the plans may not be necessary.

You may not need a lot of coverage unless your car is costly or lack adequate health insurance. You may also need them if you drive extensively. Maintain balance by knowing what you want to avoid paying for policies you may never need.

Best Auto Insurance Policy - Take Away

Having reliable insurance coverage is a crucial component for car owners. Finding the best auto insurance requires that you do your homework thoroughly. Many types of policies exist, and it’s best to understand what each entails and how it affects you.

The best company is one that pays your claims promptly after an accident. The last thing you want is to experience money problems when going through accident trauma. As a smart buyer, choose the policies that’ll add more value to your coverage.

Whichever policies you choose, strive to have all of them amount to the value of your car or more. This way, you'll be better placed if you get involved in a major accident that leaves your vehicle wholly destroyed.

Keep your track record on the road clean. Drivers with poor driving reputation can have a hard time getting the best auto insurance policy. Besides, avoid being reckless on the road just because you've got insurance coverage.

For more information, be sure to check out our car insurance section.

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