What Is Included in Basic Car Insurance?
The excitement that comes with purchasing a new car after saving for years is unmatched! And you can’t wait to take it out for a drive. But, have you thought about insurance? Which coverage should you purchase? From which insurance provider? How much will the insurance cost? These are queries that car owners, especially new ones, yearn to get answered.
Different locations mandate varying car insurances. However, basic car insurance is mandatory. And without this, you risk fines, license termination, or even jail time if caught driving without it. While purchasing basic car insurance coverage can be done with ease, understanding what coverage is provided in basic car insurance is vital.
What is basic car insurance?
Basic car insurance is coverage that drivers must have before they can legally drive a car. Provinces have different minimum insurance amounts that protect drivers in case they are involved in an accident. With basic car insurance, each coverage is priced differently, with limits depending on where you live, your insurance provider, and the optional preferences for added protection.
If you just bought a new car, I’m sure one of the questions you have for your insurance provider is: What does basic car insurance cover? And now that we have understood what basic car insurance is, let’s dive into the coverage.
Car insurance basic coverage consists of:
1. Bodily injury liability coverage
Bodily injury liability coverage is insurance that provides coverage for liability caused by the policyholder or the driver to another party. It includes coverage for the policyholder and the family members who are listed as secondary drivers.
Bodily injury liability insurance provides coverage for legal expenses incurred in instances where other persons are injured where the driver is at fault. It also provides coverage for damage to another person’s property while driving and also medical expenses related to another party’s injuries that are sustained from an accident.
Drivers must purchase the minimum liability coverage as set by the law. However, it is important to purchase enough liability insurance. Policyholders are advised to purchase more than the province-required liability insurance, especially those considered high-risk drivers.
2. Uninsured and underinsured motorist coverage
Auto insurance is mandatory. However, you will still find some drivers driving without insurance. While this is punishable by law, you need to protect yourself by purchasing uninsured and underinsured motorist coverage.
This coverage protects policyholders against accidents caused by uninsured or underinsured drivers. It can pay for medical bills or even cater to the vehicle’s repairs. And if you are hit by an underinsured driver, the coverage will cater to the extra costs which the underinsured driver cannot pay. In some cases, this coverage protects the driver if they are involved in a hit-and-run accident.
3. Personal Injury Protection
This is coverage that helps pay for medical expenses incurred in the event of an accident. It provides coverage for the driver, the passengers, and family members who sustain injuries, regardless of who was at fault. It caters to different medical costs including rehabilitation, treatment, dental care, and even funeral costs.
At its broadest, it can provide coverage for lost wages, as well as the cost incurred in the replacement of services performed by a person who was injured in an accident.
4. Comprehensive coverage
Comprehensive coverage reimburses a policyholder’s loss caused by accidents other than collisions with objects or cars. It provides coverage in events such as falling objects, explosions, fire, windstorms, hail, missiles, riots, contact with animals, and floods. It also pays for some damages to the car, such as a shattered or cracked windshield. However, most insurance providers sell comprehensive insurance with a separate deductible.
5. Collision coverage
This is coverage that pays for damage incurred to the car from a collision with another car or a falling object. For instance, if your car is damaged by a falling telephone pole or tree, the collision coverage will reimburse the damage incurred. Please note that this does not provide coverage for collision with animals. Some insurers also provide coverage for damages caused by potholes under collision insurance.
Most insurers sell collision coverage with a separate deductible. As such, you will be compensated whether you were at fault for the accident or not. In such an instance, the insurance provider will reimburse the cost of repairing the car less the deductible. And if you were not at fault for the accident, the insurer may recover the amount paid to the other party’s insurer and reimburse the deductible.
6. Property damage liability
This is a coverage that caters to damage caused by the policyholder or secondary drivers to another person's property. For instance, if you damage another person’s car, fences, buildings, lamp posts, and other structures using the car, the insurer will provide coverage for the damage.
Is basic car insurance sufficient?
There is no one-size-fits-all insurance coverage. Different people have varying insurance needs. If you are wondering whether car insurance basic coverage is enough, you need to assess your risk as well as that of all secondary drivers. Your financial situation also comes into play here. Can you comfortably pay for most expenses out of pocket?
Basic car insurance coverage is not sufficient for most drivers. Rather, it is just enough to satisfy the legal requirements. If you are involved in an accident with only the minimum insurance coverage, you may find yourself paying for most damage out of pocket.
You need to determine how much coverage is sufficient for yourself. Take a look at the coverage provided in the basic insurance and assess whether it would be sufficient to pay for damages if you were involved in an accident with a motorist with similar coverage. Also, assess whether the coverage would be enough for damages sustained to a new car, especially if the damage is significant.
While basic car insurance is mandatory, it may not be sufficient. As such, ensure you purchase more than the minimum car insurance to offer more protection in the event of an accident.