No two drivers are exactly alike; so, why should their auto insurance policies be precisely the same? Canadian auto insurance providers offer a wide variety of plans that meet the needs of different types of drivers.
In this article, we'll be discussing some of the different types of car insurance that you can choose from in Canada — liability and full coverage auto insurance.
You've likely heard both sides of the liability vs full coverage debate several times in the past. Some drivers feel that having liability coverage is sufficient, while others wouldn't dare hit the road without full coverage insurance.
If you're still on the fence about these types of auto insurance, be sure to continue reading.
What is liability coverage?
Liability insurance is a type of auto insurance that provides drivers with financial coverage if they cause harm to a third party while driving.
Liability insurance generally covers expenses caused by events that damage another driver's property, cause injury or result in death.
However, drivers must know that liability insurance only covers the other party's expenses, not their own.
For instance, if you get into a fender bender with another driver and are deemed at fault (an insurance term for responsible), then your insurance would only cover the other driver's expenses, not yours.
What is full coverage?
As the name implies, full coverage is a type of auto insurance that financially protects drivers from multiple events. Generally, full coverage features the following types of insurance:
- Liability coverage
- Comprehensive coverage
- Collision coverage
Liability coverage
We've already discussed liability coverage, so we'll keep this brief.
Liability coverage is a type of insurance that reimburses drivers when they harm or damage another motorist (or their property). Liability coverage does not cover your expenses, just the other motorists'.
Comprehensive coverage
Comprehensive coverage is a type of auto insurance that safeguards drivers from risks and perils (insurance jargon for an unforeseen event or natural disaster that you can't control).
Some risks and perils that are typically covered by comprehensive insurance include the following:
- Fire and smoke damage
- Hail and ice damage
- Falling objects
- Theft and vandalism
To learn more about the various risks and perils covered by comprehensive car coverage, you can reach out to your auto insurance provider. Your auto insurance provider can give you a complete list of risks and perils that their comprehensive plans cover.
Bonus - Actual cash value
In most cases, your auto insurance provider will cap your comprehensive coverage at the actual cash value of your vehicle, not the price that you initially paid. The actual cash value of your ride is influenced by the depreciation rate, age, and accrued kilometres (among other factors).
Drivers should keep this in mind before committing to comprehensive auto coverage in Canada.
Collision coverage
Collision coverage is a type of auto insurance that remunerates drivers after a collision with a third-party vehicle or foreign object.
In this case, the term "objects" refers to:
- Travel and utility trailers
- In-ground objects like street signs or fire hydrants
- Objects on the road's surface, such as speed bumps
Unlike liability coverage, collision coverage provides the driver with remuneration regardless of whether they're deemed at fault or not. What's more, collision coverage only protects the policyholder, not the other parties involved.
As you now know, full coverage is an extensive and protective type of insurance policy that you can rely on in your time of need (regardless of the situation at hand).
Liability vs full coverage insurance: what's the price difference?
Unfortunately, we cannot provide you with an exact answer. Like any variety of insurance, the price of liability and full coverage are influenced by a long list of individualized variables.
Some of these factors include the following:
- Minimum coverage requirements in your province or territory (for example, liability insurance is legally required in Ontario, with a mandatory minimum coverage of $200,000)
- Age (of driver and vehicle)
- Make and model of the vehicle
- Gender of policyholder
- Driving history (years on the road, number of claims submitted, number of driving offences, etc.)
However, we can confidently confirm that full coverage insurance is always more expensive than liability coverage alone. This is due to the fact that full coverage offers various methods of protection, as opposed to just one.
If you're interested in learning more about the price differences between liability and full coverage in your location, you should get in touch with your insurance provider. Your insurance provider can walk you through the price of each option.
Other types of auto insurance that you may want to consider adding to your policy
As mentioned in the opening paragraph, Canadian insurance companies offer numerous options. This means that you aren't limited to the types of coverage listed above.
If you'd like to ensure that you and your vehicle are financially protected, you can opt for one or more of the following options:
Accident protection
Accident protection (occasionally referred to as accident forgiveness) is an add-on that prevents your auto insurance provider from increasing your premium after your first accident.
Waiver of depreciation
A waiver of depreciation is an add-on that's used specifically for leased and financed vehicles. Waivers of depreciation cover the entire replacement value of the car with no depreciation for two years.
Loss of vehicle use
An add-on that helps cover vehicle accommodation expenses while your car is out of commission (due to a risk or peril).
Are you interested in any of the add-ons listed above or thinking about switching auto insurance providers altogether? If so, there's no better way to start than by chatting with an insurance advisor.
Insurance advisors are trained experts that can provide you with cheap, personalized quotes. Spending a few minutes online or on the phone can help you save upwards of 20% on car insurance!
Liability vs full coverage car insurance — which is the right option for you?
The next time you hear drivers debating about the different types of car insurance in Canada, you can tell them that there's no right or wrong answer — it all comes down to personal preference.
