Car insurance is obviously a necessary component of driving. It offers financial protection in the event of a court judgment. It also pays for your medical expenses if you're injured by an uninsured or under-insured motorist. And of course, driving without auto insurance is illegal in every province. That said, while nearly every motorist has coverage, many people are paying too much for too little.
Personal injury protection claims, damage to the car, collisions and other expenses can cause your auto insurance rate to go sky-high. For that reason, it's worth taking the time to make sure you're getting the most value for your money. Below, we'll provide a few suggestions for maximizing the value of your car insurance policy.
Liability Coverage Revisited: A Brief Review
Liability coverage pays for the damage you inflict upon others. That includes injuries sustained by other drivers and pedestrians during a traffic accident for which you are found at fault. In this case, your policy would cover (up to your limit) their medical bills and expenses related to medications and rehabilitation. This portion of your policy is called bodily injury liability.
The other side of liability coverage pays for damages you cause to another person's property. This can be damage to another person's car, or property damage such as fixing a fence or planting a new tree. This is part of your property damage liability coverage.
Adjust Your Liability Coverage For Reasonable Protection
A lot of people carry less bodily and property damage liability coverage than they need. Policyholders tend to maintain the minimum limits necessary to comply with their province's laws with little regard for their financial exposure.
For instance: imagine you get into an accident on the freeway and injure another driver, who now has to pay medical expenses totaling $100,000. Further suppose your policy has a $50,000 limit. Given the situation, your insurance company is responsible up to the policy limit. You would be left responsible for the remaining $50,000 - or $50,000.
Review the value of your assets (e.g. your home, car, rrsp's, and savings.) and your household income. Increase your liability coverage - both damage to the body and to your car vehicle - to bridge any gap that exists between it and your assets' aggregate value. One consideration is getting more insurance coverage on top of your existing policy, in order to be protected for more than the minimum your company presently insurance you for.
Invest In Uninsured/Under-insured Motorist Coverage
In the same way maintaining the legal minimums exposes you to a financial loss if you cause an accident, other drivers carrying the minimums can also leave you exposed. For example, suppose you're hit by a motorist who either lacks liability coverage or lacks a sufficient amount to pay for damages and your medical bills. You might win a court judgment, but it will do little good if the offending driver lacks the resources to pay.
This is the reason you should invest in uninsured/under-insured motorist coverage. If you are injured or your vehicle sustains damage due to another driver's actions, and that person lacks sufficient coverage, this feature bridges the gap. Without it, you might find yourself in financial distress, paying for auto repairs, medical bills, and even rehabilitation from your own pocket.
A Cheaper Policy Is Not Necessarily "Better"
Squeezing more value from your auto insurance policy does not necessarily mean paying as little as possible for coverage. This is a common trap that ensnares millions of policyholders. In seeking to buy the least expensive policy, they inadvertently expose themselves to a potentially severe financial loss.
It is critical that you take stock of your current financial circumstances. The purpose of car insurance is to offer protection from the high costs associated with being involved in a traffic accident. It makes little sense to buy coverage that fails to provide an adequate protective buffer.
The above does not suggest you should stop looking for cheap auto insurance rates. On the contrary, you should consider doing so a priority and routinely comparison shop between multiple providers. The secret is to find the cheapest possible rates on the insurance coverage you desire. One without the other has little value. Fortunately, you can compare auto insurance rates online and find the package that offers the most value for your money.
Personal injury protection claims, damage to the car, collisions and other expenses can cause your auto insurance rate to go sky-high. For that reason, it's worth taking the time to make sure you're getting the most value for your money. Below, we'll provide a few suggestions for maximizing the value of your car insurance policy.
Liability Coverage Revisited: A Brief Review
Liability coverage pays for the damage you inflict upon others. That includes injuries sustained by other drivers and pedestrians during a traffic accident for which you are found at fault. In this case, your policy would cover (up to your limit) their medical bills and expenses related to medications and rehabilitation. This portion of your policy is called bodily injury liability.
The other side of liability coverage pays for damages you cause to another person's property. This can be damage to another person's car, or property damage such as fixing a fence or planting a new tree. This is part of your property damage liability coverage.
Adjust Your Liability Coverage For Reasonable Protection
A lot of people carry less bodily and property damage liability coverage than they need. Policyholders tend to maintain the minimum limits necessary to comply with their province's laws with little regard for their financial exposure.
For instance: imagine you get into an accident on the freeway and injure another driver, who now has to pay medical expenses totaling $100,000. Further suppose your policy has a $50,000 limit. Given the situation, your insurance company is responsible up to the policy limit. You would be left responsible for the remaining $50,000 - or $50,000.
Review the value of your assets (e.g. your home, car, rrsp's, and savings.) and your household income. Increase your liability coverage - both damage to the body and to your car vehicle - to bridge any gap that exists between it and your assets' aggregate value. One consideration is getting more insurance coverage on top of your existing policy, in order to be protected for more than the minimum your company presently insurance you for.
Invest In Uninsured/Under-insured Motorist Coverage
In the same way maintaining the legal minimums exposes you to a financial loss if you cause an accident, other drivers carrying the minimums can also leave you exposed. For example, suppose you're hit by a motorist who either lacks liability coverage or lacks a sufficient amount to pay for damages and your medical bills. You might win a court judgment, but it will do little good if the offending driver lacks the resources to pay.
This is the reason you should invest in uninsured/under-insured motorist coverage. If you are injured or your vehicle sustains damage due to another driver's actions, and that person lacks sufficient coverage, this feature bridges the gap. Without it, you might find yourself in financial distress, paying for auto repairs, medical bills, and even rehabilitation from your own pocket.
A Cheaper Policy Is Not Necessarily "Better"
Squeezing more value from your auto insurance policy does not necessarily mean paying as little as possible for coverage. This is a common trap that ensnares millions of policyholders. In seeking to buy the least expensive policy, they inadvertently expose themselves to a potentially severe financial loss.
It is critical that you take stock of your current financial circumstances. The purpose of car insurance is to offer protection from the high costs associated with being involved in a traffic accident. It makes little sense to buy coverage that fails to provide an adequate protective buffer.
The above does not suggest you should stop looking for cheap auto insurance rates. On the contrary, you should consider doing so a priority and routinely comparison shop between multiple providers. The secret is to find the cheapest possible rates on the insurance coverage you desire. One without the other has little value. Fortunately, you can compare auto insurance rates online and find the package that offers the most value for your money.
Kade Phillips is an author and regular columnist at Kanetix. Compare rates and see how much you can save on your car insurance. Find cheap car insurance, or get a Canadian car insurance rate quote if you are from Canada.