Before buying a car, consider the price of the insurance as an investment to protect your investment in your car, as well as in your life & well0baing. Be sure you can afford the combined insurance and lease/loan payment. If you are currently insured, you should locate your policy, and have it handy to ensure you are comparing like policies.
Auto insurance guarantees payment of expenses incurred when your vehicle is involved or damaged in accidents, vandalism or theft. It also covers the costs of potential damages or injuries. With auto insurance, you pay a periodic (typically annual or monthly) "premium" in return for the insurance company's promise to pay for specific damages and injuries over the duration of the policy.
In Canada, you are required by law to have third-party liability insurance. This covers damages and liability to others in case you injure or kill someone or damage someone's property in a car accident. This can include lost earnings of accident victims, as well as damage to vehicles, buildings or landscaping you might run into.
How much liability insurance you require depends on the province where you live. Mandatory minimum liability insurance in Canada generally requires coverage for $200,000, except in Quebec, where the minimum liability requirement is $50,000. It's very smart to carry more than the mandatory minimum liability insurance. Minimum coverage may not be enough to cover legal damages for injuries you caused, in an accident, which leaves YOU at risk for the excess. This does not protect your other assets, and you could end up losing everything.
Fortunately, if a person files a claim for bodily injury and property damage and that claim reaches or exceeds the limit of your policy's liability, payment for property damage would be limited. That limit is $20,000 in Newfoundland, New Brunswick and the Yukon. Elsewhere, except Quebec, the property damage would be limited to $10,000.
Personal injury claims by Quebecers are prohibited in Quebec. A provincial fund pays for hospital and medical costs for injuries sustained in car accidents. The fund pays fixed amounts for pain, suffering and loss of income. In Quebec, all of the $50,000 provided by liability insurance is used to resolve property damage claims for accidents within the province. It covers both personal injury and property damage in accidents that occur outside Quebec.
Here are a few other policy options for auto insurance coverage:
Endorsements are additions or modifications to basic coverage in your auto insurance policy. For instance, there might be an endorsement, which can exclude a certain person from driving your car (a teenage relative or guest, for example). Once an endorsement is added, it takes precedence over the original insurance policy agreement.
If renting a car, your auto insurance will typically provide protection against any injuries you cause to others or to property. It probably doesn't cover damage to your rental car, so you should consider these options: