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Understanding Auto Insurance And Why You Need It

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Understanding Auto Insurance And Why You Need It

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Whether you just bought a new vehicle, are looking to renew your policy, or searching for the best auto insurance rates, you need to understand how auto insurance works.

What Is Auto Insurance?

Auto insurance is coverage that financially protects your vehicle and everything in it, preventing you from paying to cover injuries and property damage during an accident when you’re not at fault. This means when you hit someone/something with your vehicle, but you’re legally not at fault for the accident, you don’t get to pay for their injuries. Your insurance company settles the bills on your behalf.

Do I Need To Get Auto Insurance?

Absolutely Yes! For a place like Ontario where car insurance is mandatory, It’s the law there that every car owner must purchase an auto insurance premium.

Any driver found on the road not to have one may be fined anything between $5,000 and $50,000. They may even suspend your driver’s license and impound the vehicle.

Furthermore, the court may not allow you to sue your injurer for personal injury if you have an accident in an uninsured car.

But even more importantly, you’ll have to pay for your injured victim’s health care if you hit them with an uninsured car and you’re found to be at fault.

How Auto Insurance Works

You pay premiums to your auto insurance company monthly or annually to provide coverage for your vehicle. The premiums will be based on what the company estimates would be required to cover your car for the following year.

The company then accumulates your premiums into one large pool, which they would use to cover your losses should such occur during the year you paid for.

It’s basically paying for someone else (the insurance company) to take on your own risks.

Remember that you’re only covered for the exact risks stated in the insurance contract, so be sure to read it carefully before signing.

It’s important to know that there are different types of insurance for different ages groups and that some companies may not give you the best coverage or price depending on your age. For example, if you’re in your 40s you wouldn’t want to look into car insurance for new drivers over 25, nor would a 21 year old want to look at senior insurance as they wouldn’t get cover.

How Much Does Auto Insurance Cost In Ontario?

Several things factor into the cost of your insurance premium. For starters, the company may set a rate based on how much they expect they’ll get to pay out for accident claims in the following year (the year covered). However, it’s very possible to Get the best auto insurance rates in Ontario by making comparisons and then choosing which works best for you.

Some of the things that influence your insurance rate include:

  • Location – it’s higher in more crowded cities
  • Cost of vehicle
  • Your age
  • Driving experience
  • Driving history
  • How often you use the vehicle
  • Winter tires

What’s In A Standard Auto Insurance Policy?

Every driver in Ontario must have the following minimum coverage in their standard insurance policy:

Third-Party Liability Coverage: If you injure someone or damage property, your insurance company pays on your behalf.

Direct Compensation/Property Damage: If you’re not at fault in an accident, the company pays for damages on your car.

Uninsured Automobile Coverage: The company covers damage to your car and medical costs if you’re hit by an uninsured vehicle.

Accident Benefits Coverage: Whether you’re at fault or not, your medical expenses are covered.

Rather than an avenue to strip you of your money, auto insurance is a legal instrument that protects you and your vehicle from likely risks you’ll face as a driver.

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