How does car insurance work?

Laws in most provinces require some form of car insurance. You probably have a vague idea that you need insurance to help pay for damages if you were to cause an accident, but it can be hard to understand what else is covered or how much insurance you should have. If you are in the habit of keeping only the minimum coverage because it’s the most affordable, then you might want to consider how car insurance works and whether the coverage you have is adequate.

With that in mind, just how does car insurance work, and how can you get the most affordable rates? That’s what we’ll discuss here—and remember to keep this handy when you’re buying a car!

Different types of car insurance and how they work

Auto insurance companies offer several types of insurance. Often some of them are combined on your policy.

  1. Liability insurance is the minimum insurance required in most provinces. It’s the insurance that will pay for damage to someone else’s vehicle if you are at fault in an accident. It will also cover medical expenses if others are injured in an accident that you were found to be at fault.
  2. Collision insurance is also usually required if your car is being financed. This insurance covers your vehicle if it is damaged in a collision up to the value of your vehicle.
  3. Comprehensive insurance covers damage to a vehicle caused by anything other than a collision, such as vandalism, theft, wind, hail, fire or flood. This is also probably required by the lender if your vehicle is being financed.
  4. Uninsured motorist and under-insured motorist covers damage to your vehicle caused by a driver who is uninsured or has inadequate insurance.
  5. Medical insurance covers medical expenses regardless of who is at fault.
  6. Personal injury protection pays medical expenses and lost wages for the insured driver.

Car insurance typically includes a deductible, which is the amount you pay yourself before an insurance payment is made. Deductibles vary but usually start at $500. If you choose to have a higher deductible, you may have a lower premium, but you will have to pay more if you need to file a claim.

How do car insurance claims work?

If you are in an accident, or if your vehicle is damaged by another type of incident, call your insurance company using the number on the back of the card. They will ask for your policy number along with detailed information about what happened, and if another driver was involved, they will need their license and insurance information. They will assign a claim number, which you will need if you call to follow up on the status of the claim.

The insurance company will investigate the accident and send a representative to evaluate damage to your vehicle. They will also review injury claims. Once they have completed their investigation, you should receive a cheque for what you’re owed, minus the cost of the deductible on your policy.

Your insurance agent can help review your policy and determine if your coverage needs are adequate. He or she can also answer any questions you may have on how car insurance works and what to expect if you should have to file a claim.

If you’re looking to upgrade your insurance coverage, you’re always welcome to get a free 5-minute quote for your vehicle online, or to call us and we’ll be glad to help you experience our vision of insurance.

Laws in most provinces require some form of car insurance. You probably have a vague idea that you need insurance to help pay for damages if you were to cause an accident, but it can be hard to understand what else is covered or how much insurance you should have.

If you are in the habit of keeping only the minimum coverage because it’s the most affordable, then you might want to consider how car insurance works and whether the coverage you have is adequate.

With that in mind, just how does car insurance work, and how can you get the most affordable rates? That’s what we’ll discuss here—and remember to keep this handy when you’re buying a car!

Different types of car insurance and how they work

Auto insurance companies offer several types of insurance. Often some of them are combined on your policy.

  1. Liability insurance is the minimum insurance required in most provinces. It’s the insurance that will pay for damage to someone else’s vehicle if you are at fault in an accident. It will also cover medical expenses if others are injured in an accident that you were found to be at fault.
  2. Collision insurance is also usually required if your car is being financed. This insurance covers your vehicle if it is damaged in a collision up to the value of your vehicle.
  3. Comprehensive insurance covers damage to a vehicle caused by anything other than a collision, such as vandalism, theft, wind, hail, fire or flood. This is also probably required by the lender if your vehicle is being financed.
  4. Uninsured motorist and under-insured motorist covers damage to your vehicle caused by a driver who is uninsured or has inadequate insurance.
  5. Medical insurance covers medical expenses regardless of who is at fault.
  6. Personal injury protection pays medical expenses and lost wages for the insured driver.

Car insurance typically includes a deductible, which is the amount you pay yourself before an insurance payment is made. Deductibles vary but usually start at $500.

If you choose to have a higher deductible, you may have a lower premium, but you will have to pay more if you need to file a claim.

How do car insurance claims work?

If you are in an accident, or if your vehicle is damaged by another type of incident, call your insurance company using the number on the back of the card.

They will ask for your policy number along with detailed information about what happened, and if another driver was involved, they will need their license and insurance information. They will assign a claim number, which you will need if you call to follow up on the status of the claim.

The insurance company will investigate the accident and send a representative to evaluate damage to your vehicle. They will also review injury claims. Once they have completed their investigation, you should receive a cheque for what you’re owed, minus the cost of the deductible on your policy.

Your insurance agent can help review your policy and determine if your coverage needs are adequate. He or she can also answer any questions you may have on how car insurance works and what to expect if you should have to file a claim.

If you’re looking to upgrade your insurance coverage, you’re always welcome to get a free 5-minute quote for your vehicle online, or to call us and we’ll be glad to help you experience our vision of insurance.

Seriously, what else can you do in 3 minutes?

Boil half an egg?

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