What Does Car Insurance Really Cover?

Ontario law requires all motorists to have car insurance. However, simply having insurance does not necessarily mean that you understand what it covers. To determine what is covered, you should contact your insurance company to see what type of policy that you have. Generally, you can increase or decrease your coverage to fit your needs and your budget. Car insurance is there to help you pay for any damages that occur as a result of an accident. The type and extent of damages that are covered is dependent on the type of policy that you purchase. Here is what standard insurance usually covers, and how it works.

1. Third Party Liability

Third Party Liability covers any damages or injuries to another party as a result of an accident that you were at fault for. Coverage is given when a policyholder or insured driver is responsible for a car accident:

  • That results in property damage, or
  • Where someone is injured or killed

Typically, an insurance company will pay out a specific amount to the third party, but the amount is limited to the specifics of your policy.

What does car insurance really cover

2. Comprehensive and Collision Coverage

Comprehensive and collision coverage is typically optional, unless you have a car loan, as most lenders will require you to include this within your insurance policy. This comprehensive portion of an insurance policy covers for loss or damages that have incurred due to any incident other than a car accident. For example, theft, cracked windshields and vandalism would be covered under comprehensive and collision coverage. The collision coverage is useful for when you are in an accident and are at fault. It pays to repair the damage on your car or to replace it completely, depending on the value of your vehicle and the cost of repairs. Often times, a deductible is required.

What does car insurance really cover

3. Optional Coverage

With every car insurance policy, there is always the option to have additional coverage. Many people assume that this kind of coverage is automatically included in your insurance policy, but it is not. For example, it would be beneficial to have optional coverage if you were to get in a car accident while driving a rental car. This is a useful supplement to your insurance policy if you rely on your vehicle to complete day-to-day activities, such as commuting to work.

What does car insurance really cover

4. What You Aren’t Covered For…

Now that you know what the basic car insurance policy typically consists of, you may be wondering what you aren’t covered for. It may surprise you to find out that without add-ons, there are many situations where an accident would require you to pay for damages right out of your pocket. One of the most common is any damage that incurs when an accident involves pedestrians or cyclists. This goes both ways; you aren’t covered if you’re the one in the car, or the pedestrian struck by the vehicle. Lost wages and/or funeral expenses are also not always covered. Furthermore, there are some things that auto insurance doesn’t cover, even with all the add-ons. For example, if a valuable item was to be stolen from your vehicle, this is not covered under your car insurance policy.

What does car insurance really cover

It is important to understand the scope of your auto insurance policy in order to ensure that you are protected in the event of a collision. Depending on your needs and budget, you can choose the amount of coverage that you purchase.

Colleen McHugh


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