Bal­anc­ing cost and cov­er­age

Ignition - - Front Page - By Shaun Keenan

It’s il­le­gal to drive in Canada with­out auto in­sur­ance. Be­yond the le­gal min­i­mum, how much and what kind of cov­er­age you will need is de­bat­able, and should be con­sid­ered on a caseby-case ba­sis, ide­ally ev­ery year around the time of your re­newal. Not hav­ing enough in­sur­ance cov­er­age, or not hav­ing the right kind of cov­er­age, can leave you with a huge re­pair bill in the event of an ac­ci­dent or to­tal loss. If a per­son(s) is in­jured or killed, then you could also be fac­ing le­gal ac­tion, and that’s when things start to get re­ally ex­pen­sive.

We asked some lo­cal in­sur­ance ex­perts to help us cut through the le­gal­i­ties and try to un­der­stand the most im­por­tant as­pects sur­round­ing au­to­mo­bile in­sur­ance. “For starters, auto in­sur­ance rates are based on things like a driver’s record, the ve­hi­cle they drive, where they live and claims fre­quency,” says John Bordignon, di­rec­tor of me­dia re­la­tions for State Farm Canada. “In terms of spe­cific ve­hi­cles, those that are less ex­pen­sive, cheap­est to re­pair, have the best claims his­tory and are gen­er­ally less pow­er­ful are the most eco­nom­i­cal to in­sure.” But it’s your driv­ing record that is the most im­por­tant fac­tor when it comes to es­tab­lish­ing rates. “Most of the fac­tors that can keep your auto in­sur­ance rates down are within your con­trol,” says Bordignon. “No tick­ets or ac­ci­dents are ideal, as are ad­her­ing to pro­vin­cial grad­u­ated li­cens­ing laws and the suc­cess­ful com­ple­tion of a cer­ti­fied driver train­ing course.” “As long as you don’t have an abun­dance of tick­ets, your rat­ing is de­ter­mined by how long it’s been since you’ve had

an at-fault ac­ci­dent,” elab­o­rates Jamie Maud­s­ley, a full-time bro­ker with Bill Blaney In­sur­ance Bro­kers in Dorch­ester, On­tario. Plus the more you drive, the more at risk you are of be­ing in a col­li­sion, so that is also a fac­tor, he ex­plains.

Rates are also af­fected by the op­tional cov­er­ages an in­surer pro­vides, Bordignon states. “De­ductibles, com­pre­hen­sive, col­li­sion and ren­tal cov­er­age are all choices a per­son can make that will af­fect the amount of pre­mium they pay.”

Some in­sur­ers even in­crease premi­ums for cars that are more sus­cep­ti­ble to dam­age, oc­cu­pant in­jury or theft, and lower rates for those that fare bet­ter than the norm.

Maud­s­ley helps put this into per­spec­tive. “Each ve­hi­cle has an ac­ci­dent ben­e­fit rat­ing and, as a rule of thumb, there is a much bet­ter chance of get­ting hurt in an ac­ci­dent while driv­ing a small car com­pared to a full-size truck. The ac­ci­dent ben­e­fit cov­er­ages make up a sub­stan­tial amount of any in­sur­ance pre­mium, should you get hurt in an ac­ci­dent.”

Be­fore sign­ing on the dot­ted line for your new ride, Bordignon sug­gests that shop­pers do some fur­ther re­search on the par­tic­u­lar ve­hi­cle that’s caught their eye. Some key ques­tions to have an­swered in­clude: ‘Does it have strong safety rat- ings?’ ‘Is the same par­tic­u­lar model of­ten stolen?’ ‘Does it cost more to re­pair if it is dam­aged in a col­li­sion?’

When it comes to pur­chas­ing in­sur­ance cov­er­age for a new ve­hi­cle, Maud­s­ley points out some im­por­tant op­tions to con­sider. “If you are pur­chas­ing a new car, you’ll want to make sure you have an OPCF 43 en­dorse­ment on your pol­icy, which will give you re­place­ment cost on the ve­hi­cle (less freight and taxes) for usu­ally the first 24 months af­ter pur­chase.”

These rid­ers are free with some com­pa­nies, and up to $50 for the year with oth­ers. “Let’s say you pick up your new $25,000 ve­hi­cle and not 10 min­utes later you’re in­volved in an ac­ci­dent that writes off the ve­hi­cle. If you don’t have that en­dorse­ment, and be­cause the ve­hi­cle is con­sid­ered ‘used’ the in­stant it’s driven off the lot, you would lose the en­tire de­pre­ci­a­tion amount, which will greatly im­pact the value of the ve­hi­cle and, thus, the in­sur­ance pay­out.”

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