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A girl’s guide to auto insurance

So you’ve gone through the process of buying your hot new car, but now you need to protect your little baby before you hit the road. At first glance, auto insurance can seem complicated and confusing, but it doesn’t have to be.

Young woman in her new car

With all the jargon and marketing messages aside, it’s easy to work out exactly what auto insurance is, what kind of coverage you need and what you’re going to pay.

What is auto insurance?

Auto or car insurance is a “just in case” policy that can cover expenses and losses associated with a car accident that might have damaged your car or another car, damaged property or injured you, another driver, other passengers or pedestrians. The extent of what exactly will be covered and up to what dollar amount are determined at the time you sign your insurance contract, so be sure you read it carefully and understand what is included. If you’re not sure, ask!

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Do I need auto insurance?

Wherever you live in Canada, all governments have determined that you must have a degree of auto insurance before putting your car on the road. The basic amount of insurance required is determined by individual governments. In some areas, you might also be required to get insurance for medical expenses and loss of income.

The Insurance Bureau of Canada (IBC) explains that “auto insurance is sold by private companies in all of the ten provinces and three territories. However, in BC, Saskatchewan and Manitoba, government-run insurance companies sell the basic/required minimum auto insurance… and private and government insurers compete to sell enhancements or ‘top-ups’ to the basic policy.”

What if I want more than basic auto insurance?

In addition to basic car insurance, which often just covers others, you can purchase extra insurance that will cover damages to your car in a collision and another policy that will compensate you for theft, vandalism or other car mishaps.

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How is the cost of my insurance worked out?

A number of factors can affect the cost of car insurance (known in the business as the “premium”). The IBC details that “car insurance premiums, like all insurance premiums, are determined based on risk. That is, how likely it is that a customer — and a group of customers with the same set of circumstances — will make a claim, and how much those claims will likely cost.”

Circumstances or factors that are used to determine your insurance cost include the following:

  • Your “statistical” details, such as your age, where you live and the known driving record of other people with the same statistical details as you
  • The kind of car you drive
  • How you use your car (especially frequency on the road)
  • Your personal driving record
  • Other factors, such as government taxes and regulations

Once I have auto insurance, what should I do if I have an accident?

In the unfortunate event that you have a car accident, there are a number of things you can do to help your case.

CAA South Central Ontario advises that “after an accident, it is important for you to obtain complete information on the other party or parties involved. For example:

  • All vehicle information
  • Licence plate numbers
  • All names, addresses and phone numbers
  • Drivers licence numbers for the other drivers involved
  • The location of the accident (e.g., major intersections)
  • Police information (if they attended the scene).”

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