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Updated: Apr 11, 2023, 3:23pm
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Owning a car has long been associated with a sense of freedom and endless possibility. The open road has been romanticized in countless novels, songs and movies. You can almost picture yourself turning up the volume on the radio and driving off into a technicolour horizon. The credits roll.
But for all the great adventures you plan to embark on, car ownership comes with a bit of practical advice: With great driving comes great financial responsibility.
Of course, we’re talking about car insurance. Whether you’re buying your first car or your parents say that it’s time to get your own policy, finding the right car insurance might seem like a daunting task. But the journey isn’t all that bad. (What’s more, car insurance is required by law.) With a little bit of preparation, you can get a solid policy with the right coverage types for a good price.
Standard car insurance offers protection to the driver, occupants and any pedestrians involved in an accident with the vehicle. Additional coverage may cover any damage to the vehicle.
It’s smart to familiarize yourself with the types of car insurance so you know what you’re buying. While car insurance varies from province to province, there are two kinds of mandatory coverage across Canada:
Your policy might also include the following:
Optional coverage (also known as endorsements or a rider) include:
It’s also a good idea to shop for car insurance before you purchase a car. Without insurance in place you may not be able to drive your new car off the dealer’s lot. You’re going to need proof of insurance before you can take the car home with you.
Additionally, it’s smart to budget for the cost of insurance along with your loan payment and vehicle maintenance expenses. While many factors influence what you’ll pay for insurance, the type of vehicle you drive plays a role, so it’s good to have an idea of the most and least expensive cars to insure before you close the deal.
The Canadian Loss Experience Automobile Rating (CLEAR) assesses how likely it is that a specific vehicle will be involved in a claim and for how much. Using that data, the Insurance Bureau of Canada publishes an annual edition of “How Cars Measure Up” that analyzes statistics on the number and cost of collision, comprehensive, DCPD and accidents benefits claims for the most popular vehicle models in Canada.
Here’s what you need to know:
Then you can ask your insurance agent to set up a policy. If you have the car picked out and know the vehicle identification number (VIN), this part is a breeze. You can have your policy ready to go before you arrive at the dealership. If you don’t have the VIN yet, ask if the agent can set up a policy with the information you have, like the drivers in your household and the address where you’ll garage the vehicle. Once you decide on the car, call the agent with the VIN to complete the purchase of the car insurance policy.
Before you buy a car insurance policy, you will need to gather some personal information for you and any other drivers who will be listed on the policy, including:
If you’re a new driver and/or buying your first car insurance policy, you can expect to pay more than an experienced driver who has had insurance for several years. That’s because car insurance companies take a look at driving history and insurance history when setting auto insurance rates. The less driving experience you have, the more likely you are to file a car insurance claim.
Besides your driving record, other pricing factors insurance companies look at usually include:
And if you have your heart set on that candy apple red car, go for it. The colour of your car has no impact on your insurance rates.
Canada offers both public and private car insurance. Drivers in British Columbia, Saskatchewan and Manitoba must buy public or government-funded insurance (though supplemental coverage may be sourced from private insurers), while drivers in Ontario, Alberta, New Brunswick, Newfoundland, Nova Scotia and PEI have access to private insurance. Quebec offers a hybrid of both.
Car insurance rates vary between provinces and even between drivers within the same city, so not all 40-year-old women driving a Toyota RAV4 in Toronto pay the same insurance rate. That’s because rates are set using a variety of very individual data points, factored against the perceived risk of each driver.
According to February 2023 data sourced from the Insurance Bureau of Canada, the average annual insurance premium for drivers in PEI was $950, while drivers in Ontario paid whopping $1,761.
Here are ways a first-time car insurance buyer can save money:
Make sure you check with your insurance agent if you’re going to make deliveries with your car. Using your vehicle for business or commercial purposes isn’t generally covered by a personal auto policy. You may need to buy auto insurance for delivery drivers, such as a commercial auto insurance policy. However, insurers such as Aviva and Economical offer Ride-Sharing Insurance for drivers with Uber or Lyft.
You can expect both financial and legal consequences if you get caught driving without car insurance. Not only will you face fines, penalties (such as having your license revoked) and even jail time, but also you’ll likely be charged higher rates when you buy a car insurance policy.
No fault insurance doesn’t mean that no one is at fault when there is an accident. It means that if you are injured or your car is damaged in a collision, you deal with your own insurance company regardless of who caused the accident. This saves time with the claims process and keeps more accidents out of the courts system.
However, after an accident an insurer still need to establish who is at fault and by how much to determine the impact on insurance premiums going forward. Most provinces have regulations called Fault Determination Rules that direct insurance companies how to assign fault, between zero to 100% at fault.
Jason Metz is a writer who has worked in the insurance industry since 2007. As a former claims handler and fraud investigator, he’s seen a lot, and enjoys helping others navigate the complexities and opaqueness of insurance. He has a B.S. in Criminal Justice from Kutztown University and an M.F.A. in Creative Writing from the University of California Riverside, Palm Desert.