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Before you can take your car on the road, it will need to be insured. If you’re ever pulled over by law enforcement, you’ll need to show proof of insurance, otherwise you could find yourself being slapped with a hefty ticket.
That said, there are different levels of car insurance that you should be aware of, some that are mandatory and others that are more comprehensive and provide more coverage.
Third-party auto insurance is a required form of auto insurance that you’ll need to take out when you purchase a vehicle. This type of policy is mainly used to cover any medical bills, legal bills, or payments required to repair the vehicles of other drivers if you’re the cause of an accident.
Let’s dig into third-party auto insurance in a little more detail and see what’s included in these policies.
As mentioned, third-party auto insurance is a mandatory type of car insurance that every driver in Canada must have. This coverage pays for various costs that you may incur if you’re ever involved in an accident that’s your fault. The costs that third-party auto insurance policies cover include the following:
While you don’t need anything other than basic third-party liability insurance, you do have the option to apply for additional coverage with other types of policies. More specifically, “collision” and “comprehensive” are other types of policies that you may want to consider for added protection.
The question is, what’s the difference between these policies and a third-party auto insurance policy?
This type of car insurance offers coverage for maintaining and repairing your automobile after an accident. It may also cover the cost to replace your car if it’s been subject to extensive damage and is deemed a write-off.
This form of auto insurance protects your car if it is damaged as a result of vandalism, fire, theft, falling objects, or natural disasters.
As you can see, collision and comprehensive policies offer coverage for your car, while third-party liability auto insurance is meant to help pay for damages caused to other vehicles or individuals as a result of an accident that was your fault.
We’ve already established that you need third-party auto insurance in order to lawfully operate a vehicle on the roads in Canada. But exactly how much of this type of insurance is required?
In most provinces, you’ll need a minimum of $200,000 worth of third-party liability coverage. There are, however, some exceptions to this rule. For example, Quebec requires a minimum of $50,000 in coverage. Plus, you’ll be capped at a certain amount for property damage included in this amount.
You also have the opportunity to boost your third-party liability to anywhere from $1 million to $5 million, based on the amount of coverage you prefer to have. But your premiums will be higher as a result of increased coverage.
The cost of third-party auto insurance policy varies quite a bit from one driver to another. The premium price you will pay will depend on a number of factors, such as the following:
While there are certain things you can’t do much about when it comes to reducing the cost of your auto insurance premiums, there are other things that are in your control:
You can’t get away with not having an auto insurance policy in place. That said, you have a choice between going with a policy that comes with all the bells and whistles and something more basic, like a third-party auto insurance policy. Be sure to speak with an insurance agent to help you determine if this policy is enough for you, or if you require something a bit more comprehensive.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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