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There are a few assets in life that come with big-ticket price tags, and a new car is one of them. Considering how valuable your new vehicle is, it makes sense to protect yourself financially if your car is ever damaged, vandalized, or stolen. And that’s what a car insurance policy promises.
New vehicle insurance is a crucial type of policy that protects you in a variety of circumstances, whether you’re at fault for what happened or not.
While some types of insurance are not mandatory – like life insurance – car insurance is. Before you take your new car out on the road, you’ll need to take out an auto insurance policy.
It’s the law, and if you are ever found without an active policy in place, you could be fined heavily as well as have your license suspended for at least 30 days. On second offences, your fines can translate to tens of thousands of dollars, and your license could be suspended for up to one year.
Plus, you risk having your car temporarily impounded. Clearly, driving without car insurance can cost you dearly.
That said, there are varying degrees of vehicle insurance that you can choose from. Although a basic policy is required, there are more comprehensive policies that are optional but offer more coverage.
The cost of car insurance varies from one person to another based on a variety of factors, including the following:
Having said all that, the average cost of auto insurance is just over $1,100 a year, or close to $100 a month.
An auto insurance policy may cover the following parties in the event of a collision:
In certain provinces, passengers who are injured or others who are involved in an accident and have their own policy will need to file a claim with their policy first.
There are a handful of types of auto insurance policies, one of which is mandatory and the rest are optional.
This is the most basic type of vehicle insurance and is mandatory for Canadian drivers. Liability insurance covers damages done to another person’s car or property as a result of a collision that you are involved in. It also covers injury or death to others that your vehicle caused. However, this policy does not cover the cost of repairing your own vehicle.
This is an optional policy that you want to consider if you are looking for more coverage for yourself and your vehicle. It includes compulsory liability coverage and covers the cost of repairing or replacing your car if you hit another vehicle or object. It may also provide coverage for you if you are ever involved in a collision with another driver who is not insured.
This policy is much more comprehensive than the others – hence the name – and offers the highest coverage available. It covers the cost of damage done to your car as a result of vandalism, theft, accidental damage, flood, fire, hail storms, and wind storms. It also provides compensation for key replacement, rental cars, and emergency accommodation.
When shopping around for new vehicle insurance, consider the following factors:
To buy an auto insurance policy, follow these steps:
Gather the necessary documentation.
Confirm any other drivers on the policy. If your spouse or child with a G2 license will be driving the vehicle, you will need to confirm them as secondary drivers.
Choose your policy. If you are looking to add on to your basic liability insurance policy – such as with collision or comprehensive coverage – you’ll need to let the insurance agent know so they can set up your policy accordingly.
Choose your deductible. You can choose the deductible to pay before the policy kicks in. A higher deductible usually means your premiums will be lower, while a lower deductible will translate into higher premiums.
Why pay more for new vehicle insurance than necessary? Luckily, there are some ways to snag a lower rate on your policy:
Most insurance providers offer some form of discount in a variety of settings. For instance, they may offer discounts to seniors, those who belong to certain organizations, and those who have a clean driving record with no claims.
If you are looking for home or life insurance in addition to auto insurance, consider taking all of these policies out with the same insurance provider, who will likely offer a discount for bundling insurance products.
A deductible is only payable when you file a claim. Instead, the premiums are required to be paid on a regular basis. By choosing a higher deductible, your premiums will be lower, which can save you money over the long run if you don’t file any claims along the way.
While there are more comprehensive policies that can offer more protection, they come at a price. If you don’t think you need all the bells and whistles, then perhaps a basic policy may be all that you need, which will cost less.
For instance, you may not need comprehensive coverage if you drive an old car. If your vehicle is ever totalled or severely damaged in an accident, your payout might not be that much because of its lower value. In this case, a basic liability policy should suffice.
Luxury cars tend to be more expensive to insure, as are older vehicles. You may be able to secure lower premiums by driving a newer, cheaper vehicle.
Do your best to drive responsibly and avoid putting yourself in a position to get pulled over and ticketed. A driving record that’s full of infractions will cost you more in higher premiums.
The majority of insurance providers offer discounts to drivers who have taken a defensive driving course. This can be especially helpful if you have a tainted driving record.
While the overall rate may be higher when you combine policies, the price per person will be lower.
Most insurers look at your credit rating when determining how much to charge you in premiums. Studies have shown that those with higher credit scores are less likely to file a claim.
Check out how gender affects your car insurance rates.
Even though car insurance is mandatory, it’s extremely useful and can provide you with peace of mind if you’re ever involved in a car accident. Imagine the sky-high costs that could come with medical bills, repairs to all vehicles, and legal fees. Without insurance, you would be on the hook for paying it all out of pocket. Just be sure that wherever policy you take out, it fits your budget and provides adequate coverage.
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