What you need to know about car insurance

WORK WITH CAR INSURANCE BROKERS IN OTTAWA TO FIND THE BEST COVERAGE FOR YOU

There comes a time in every driver’s life when they have to shop for car insurance. Maybe you’re still a young driver, finally moving off your parents’ insurance plan when you get your starter vehicle. Whatever the case, insurance is mandatory in Ontario, and indeed Canada, if you’re going to be driving on the road!

But where do you start? Finding the right car insurance can take some time. You want to save money, but you also want good coverage in case you get into an accident.

It’s important to shop around to find the best coverage and rates out there. Thankfully, there are car insurance brokers in Ottawa who can do the shopping around for you. They’ll help you save time and offer professional advice along the way.

So, if you’re new to the insurance game, here’s what you need to know about car insurance coverage.

TYPES OF CAR INSURANCE

TELEMATICS

Telematics insurance base the premiums on driving behaviour. A black box or a mobile app monitors driving habits and provides a discount accordingly. For example, some telematics boxes monitor sudden accelerations and sudden braking events. While this can lead to better driving habits, telematics boxes do not provide context, and there are some instances where quick acceleration and braking are necessary.

THIRD-PARTY ONLY (TPO)

TPO covers you against damage to other cars, people, and property. This covers liability for injury to others, including passengers in your car. TPO insurance may also cover liability while towing a trailer or caravan. But as the name suggest, it’s third-party ­only, and won’t cover your damage to your vehicle. TPO is typically the cheapest insurance policy available.

THIRD-PARTY, FIRE, AND THEFT (TPFT)

TPFT covers the same as TPO, plus extra coverage for your car if it’s stolen, damaged in a fire, or damaged while stolen. It’s usually more expensive than a TPO policy and covers damages to your vehicle, too, which makes it a bit more appealing.

COMPREHENSIVE

Comprehensive insurance covers everything that TPO and TPFT cover, and is by far the most, well, comprehensive coverage available. Comprehensive insurance plans are also the most common car insurance policies around, as many banks require such a policy when arranging a car loan. It’s important to keep in mind that it does not cover damage from regular wear and tear.

It actually might surprise you to learn what comprehensive insurance actually covers, protecting you against:

There are some policies that offer less protection for a lower price. For example, you can opt out of coverage for windshield damage or medical expenses, but you’ll have to weigh the costs and benefits of going with less coverage.

Are you willing to pay out-of-pocket expenses for repairs or expenses that aren’t covered? Make sure to go over the details of the coverage before deciding on a policy.

EXCLUSIONS AND EXCESS

Many car insurance policies include a section for exclusions. These exclusions are what the insurance policy won’t cover. Take some time to review exclusions in any plan you’re looking at before you sign. It’s important to know what isn’t covered before agreeing to new insurance. Excess, meanwhile, is what you are liable to pay towards a claim. Insurance plans may have compulsory and voluntary excess.

COMPULSORY EXCESS

The insurance company sets this amount. It is usually influenced by the information you’ve provided. High risk factors will increase the amount of excess. For example, luxury cars and young drivers may cost the insurer more in claims, so excess will be higher.

VOLUNTARY EXCESS

To reduce the cost of your insurance, you may be able to choose an amount to pay for the cost of a claim. Your insurer will add this amount on top of the compulsory excess.

ANNUAL MILEAGE

Insurers ask for your annual mileage when calculating your premiums. Simply put, if you drive frequently, your mileage will be higher. Because you’re driving more frequently, insurers consider that a risk. More time behind the wheel is more potential for an accident, after all, even if you’re not the cause.

Not sure where to start? If this is your first time calculating your mileage, here are some tips to help with the estimation:

BRAND-NEW CARS

If you bought your car new, check its odometer reading. Divide this reading by the number of years you’ve had your car to find the annual mileage.

For example, if you’ve had your car for two years, check the current odometer reading. Then divide it by 2 to get your annual mileage. Note that, as a general rule of thumb, the average vehicle racks up 20,000 KM in mileage every year. If in the first year of owning a vehicle you manage to exceed that, you might notice that on your premium.

CALCULATION USING PAST VEHICLE MAINTENANCE RECORDS

You can check previous vehicle maintenance and service records to get an idea of the mileage. Compare your odometer reading today to the reading from the last service record.

For example, current reading – last year’s reading = annual mileage. Or, current reading – reading from 6 months ago x 2 = annual mileage.

CALCULATION USING COMMUTE & WEEKEND MILEAGE

To calculate your commute, take the total distance to work and back home. Multiply the distance by the number of days you commute.

For example, say it’s a 10-km drive to work (20 km in total there and back), and you work 5 days a week. So 20 km x 5 = 100 km per week for your weekday commutes.

If you’re not sure of the distance, use Google for the exact distance from your home to your work’s address.

You will need to add your weekend mileage to your commute mileage to get a total mileage per week. To calculate weekend mileage, use the distance you travel each day to and from work, and multiply by two. Using the commute distance example from above, this would be 20 x 2 = 40.

So your total mileage per week will be 240 km. To get the annual mileage from this, multiply the weekly mileage by 52 weeks (240 km x 52 weeks = annual mileage of 12,480 km).

If you don’t drive to work, your car insurance broker can help you calculate your mileage.

NO-CLAIMS BONUS

Insurance companies reward those who don’t make any claims for a year or more. This bonus is a reduction in the cost of their insurance. By not filing any claims, it proves that you are a responsible, low-risk driver. But your no-claims bonus will be affected once you file a claim that your insurance company must cover.

TIPS FOR FINDING THE BEST INSURANCE PLAN

SHOP AROUND

As mentioned before, the best way to find a suitable insurance plan is to shop around. Car insurance brokers will compare various insurance plans for you. You can compare prices and coverage and make sure you’re getting the best plan out there.

PAY INSURANCE IN FULL

Although paying a large lump sum may seem expensive, you will end up saving money over the long run. Many insurance companies offer a discount to those who pay the full amount at once.

SWITCH TO A PREFERRED PLAN IN SIX MONTHS

Since insurers consider new drivers high-risk, insurance premiums will be higher at first. But after six months of a clean driving record, new drivers can switch to a preferred plan with a lower rate.

PROVIDE ACCURATE INFORMATION

Always provide insurance companies with 100% accurate information. If you provide false information, your policy will become void.

Contact car insurance brokers in Ottawa for help choosing coverage. They will make sure you get the best coverage to protect you and your car.