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Choosing the Right Kind of Auto Insurance

When you’re shopping for auto insurance, you’re often faced with a lot of choices. You know you have to have car insurance to drive, but apart from the required coverage, there are also some options available to you. How do you know what coverage is best for you?

Mandatory Coverage

First, check out the mandatory insurance coverage, the coverage you can’t be without; you don’t want to get caught driving without it, because you’ll be fined or possibly lose your license. Or worse, if you damage someone’s personal property, or injure or kill someone and are sued, you will have to bear the costs on your own.

Optional Coverage

Beyond the required coverage for the basics, there are also a few options you may want to consider, depending on your situation and the type of car you have. Here are some things to consider when deciding on optional insurance coverage.

Are you buying or leasing the car?

If your car is leased or financed, your leasing company will usually require that you add two more types of coverage:

  • Collision covers you if your car hits another object, or if your car rolls over or gets hit by an object. Without Collision coverage, if you’re entirely at fault in an automobile accident, your vehicle repairs are not covered.
  • Comprehensive covers you if your car is stolen, vandalized, damaged by fire, or if windows are broken or cracked.

How old is the car?

If it’s less than two years old, you may want to add Removing Depreciation Deduction. In the event that your vehicle is stolen (and not recovered) or written off in an accident, this coverage will waive the depreciation for up to two years.

If you own a car that is more than 10 years old, you may consider not including Collision or Comprehensive coverage. Your vehicle may not be worth much more than the premium charged for each coverage. It depends on how comfortable you are with paying for these damages yourself.

On the other hand, if your car is less than 10 years old, you may want to include both Collision and Comprehensive to cover the much-higher costs of repairing or replacing a newer vehicle. Depending on the age of the vehicle, you may choose to increase the deductible from $500 to $1,000 or more. Higher deductibles will help reduce your premium.

Where will you be driving the car?

If you travel to a province or state where the mandatory liability coverage is lower, you might want to add Family Protection coverage. This option gives you and your family the same protection limits as your third party liability coverage if you’re involved in a not-at-fault car accident with someone who has less insurance, no insurance, or is an unidentified driver (e.g., hit and run). While this is technically an optional coverage, we include it automatically in all policies.

Do you often rent or borrow vehicles?

Liability for Damage to Non-Owned Automobiles coverage protects you if you damage a car or trailer that you rent or borrow anywhere in Canada and the United States. Depending on what kind of vehicle you are renting for personal use, this means you wouldn’t have to pay extra for the rental agency’s insurance.

Would you have alternative transportation if your car was damaged badly?

The Loss of Use/Transportation Replacement option pays for a car rental, taxi or public transit when your car is in the shop because of a loss or damage that is covered by your policy. It makes the whole inconvenient experience of being in an accident just a little more bearable.

What kind of items do you keep in your car?

One type of insurance car owners often overlook is actually Property Insurance. Did you know that if your luggage was stolen from your car, that it’s actually your property insurance that covers it? If you don’t have property insurance, anything that’s not considered a part of your car isn’t covered by auto insurance.

In fact, the only items that are covered under your auto policy are those permanently attached to your vehicle, like your car stereo. So, if you often keep your CD collection, laptop, sports equipment, or cell phone in your car, you might want to consider the extra protection of a property insurance policy.

Once you get a quote, you’ll be able to add or remove optional coverage and change deductible amounts to see how they affect your premium; however, make sure your quote includes all of the coverage you need. Take note of what coverage is included in the premium so that you can more accurately compare quotes.

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