Auto Insurance - Types of coverage needed

To understand car insurance is like trying to decipher advanced calculus. But really is not that difficult if you understand and learn the basics of car insurances. The C anadian law requires that you insure your car for $200,000 Third Party Liability Coverage and Basic Accident Benefits Coverage. When you buy your car insurance you will receive a Motor Vehicle Liability Insurance Card, this is your "pink card". This is proof that you have insurance coverage for your car.

Your car insurance is then valid anywhere in Canada and the United States. It is a good idea to carry your "pink card" with you at all times and you must show it if a police officer requests it. You will also need to show your "pink card" for the Ministry of Transportation when you first register your car, and then each year when you renew your licence plate.

You must have a minimum of $200,000 in Third Party Liability coverage. This is to cover injuries to any other person, or their property, when you are the driver at-fault in an accident.

But if you are involved in a serious car accident, $200,000 will not go very far to cover the damages. It is more common to have $1,000,000 or more of liability coverage. Just remember you are responsible for any shortfall in coverage. To protect you if you are unable to work due to an accident you have buy accident benefits coverage (except in Québec). This covers medical expenses and provides income benefits.

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It is not required by law to purchase car insurance to cover damages to your car. But if you have a newer car, you will want to protect your car and you should consider purchasing collision and/or comprehensive coverage. You will appreciate collision cover in the event your need repairs or replacements if your car collides with another car or property. The higher the deductible you elect, the less you pay for your premiums. But if you are at fault for an accident how much are you willing to pay out of your pocket for repairs? $300, $500 or $1000? Just like a medical insurance, you would have to pay the deductible amount first and then the car insurance company will pay for the remaining charges for the repair.

The other term to be familiar with is the comprehensive coverage. This coverage pays for the damage caused from fire, falling object, theft and vandalism. This coverage work in the same way as the collision cover deductibles work, the more you pay out of your own pocket the less you pay for the premium. When you are thinking leasing or financing your car, the leasing company or bank will require that you insure your car for collision and comprehensive coverage.

Your car insurance is typically made up of these three explicit types of coverage: liability, property and medical coverage.

1. The liability coverage cover anything you are legally responsible for, such as when other are injured or their property is damaged in an accident determined to be your fault.

2. The property coverage will cover damage which occurs to your car in an accident. The coverage will also be used if your car gets stolen.

3. The medical coverage covers any expenses for injuries, rehabilitation due to injuries, lost wages and funeral expenses.