New Car Insurance Guide

You finally got that new car that you have been dreaming about for ages! And you cannot wait to drive it. However, you need to ensure that you have the required car insurance coverage before you start driving it on the road. Why do you need car insurance while you have had your old car for ages? No matter how good of a driver you are, accidents happen. And you do not have to be at fault. However, without proper insurance coverage, you can end up paying huge repair costs and even worse, you lose your car. Basic motor insurance coverage is mandatory in most locations. Driving without one may see you in trouble. If you are unsure about what insurance coverage for your new car or how to go about it, this guide will save your day. 

What insurance coverage is provided in auto insurance?

New car insurance is classified under auto insurance. Let’s take a look at what this insurance can include. 

1. Comprehensive coverage

This is insurance coverage that can be added to the mandatory policy and it provides coverage to all perils other than a car accident. Comprehensive car insurance provides coverage for vandalism, theft, damage caused by animals, falling objects such as trees as well as natural disasters. While it is optional coverage, it is essential coverage, especially for a new car. This is because new car repairs can be insanely expensive. 

2. Liability coverage

This coverage safeguards you against lawsuits for injuries and damages that result from accidents when you are at fault. While there are few situations where you may not be considered at fault, the rule of comparative negligence faults both drivers for an accident. For instance, if another driver hits your car from behind, you will be considered partially responsible for the accident.

Liability insurance provides coverage for:

• Costs incurred in treating injuries that result from the accident- Liability insurance provides coverage for medical costs, suffering, lost wages and income as well as pain inflicted on the other driver and his passengers. This policy does not provide coverage to you or direct family member passengers.
• Property damage to other parties- Liability insurance provides coverage for property damage to other parties. For instance, your insurer will cater for vehicle, structural or physical property repairs to other parties. Some policies also cater to costs incurred by other parties due to the inability of using the damaged property. 

3. Auto-collision insurance

This is insurance coverage that can be added to the mandatory policy and it provides coverage for damage caused to your vehicle when you are at fault. Although more expensive, it is an important policy for new car owners. 

4. Personal injury protection

This is the portion of the standard, mandatory policy that provides coverage for additional hospital and medical expenses incurred as a result of an accident regardless of who was at fault. While coverage provided may differ in different locations, funeral costs, lost wages and rehabilitation are some of the coverages provided. Ontario auto insurance also offers increased options for these coverages, called Optional Accident Benefits.  Speak to your broker to learn more about these important coverages. 

5. Underinsured and uninsured coverage

While car insurance is mandatory in most regions, some drivers may still drive without insurance coverage. If you are involved in an accident with an uninsured driver, your Ontario policy will respond to fix your car. This coverage is built into the mandatory policy. 

Are there exclusions for new car insurance? 

Assuming that all perils are safeguarded in auto insurance is a major mistake that most new car buyers make. While this information is readily available in the policy, exclusions may not be clear enough for most to understand. 

Exclusions differ with insurance providers. However, some of the most common exclusions include:

• Routine car maintenance 
• Vehicle repairs
• Damages exceeding your liability coverage
• Rental car coverage
• Accident forgiveness
• Roadside assistance  

Bonus — Check out this article if you'd like to see our list of top value cars in Canada (based on insurance rates).

What factors will affect the insurance cost for your car?

• Have you made claims in the past? – Your insurer can either increase or reduce the cost of your car insurance depending on the number of claims made in the past. Too many claims imply that you are a huge risk to insure. To safeguard themselves, your insurer is left with no option but to raise the cost of your car insurance. 
• The age of your car- New cars are more expensive to repair or replace compared to older cars. As such, do not expect to remit a similar insurance amount as that of your old car. 
• The type of car- If you just purchased a new luxury car, your insurance rates will be higher given the high repair or replacement costs. 
• Are you an experienced driver? -  Some insurers will base your insurance cost on your driving experience. If this is your first time on the road, you may be charged higher premiums than someone who has years of driving experience. 

How can you reduce insurance costs on your new car? 

• Shop around- Do not be in a rush to settle for one insurer. Shop around, ensuring you compare the costs, coverage and exclusions. 
• Ask for discounts- You may be insuring a new car. But that does not mean that you have to break the bank to get coverage. Always ask for discounts based on your driving records as well as the number of claims made. 
• Increase the deductible amount- Increasing the deductible amount will reduce the premium amount. However, this is not advisable if you are at more risk of being involved in an accident. For instance, if you are a new driver, increasing the deductible amount may not be a wise decision after all. 

Bottom Line

Whichever coverage you opt for, ensure that you get a reliable company and a reasonable cost. Check out our auto insurance policy portal for more information on what is available to you.