Why is it required by law in Alberta?
Canadians are required by law to have third-party liability insurance. This covers
damages and liability in case you injure or kill someone or damage someone's
property in a car accident. For instance, if you injured a pedestrian while running
a red light, third party liability coverage would pay the costs of the victim's
injuries. If you damaged the victim's bicycle, it would pay for the bike's repair.
Mandatory minimum liability insurance in Alberta requires coverage for $200,000.
How much liability insurance should I carry?
You should carry more than the manditory liability insurance. You should have
enough insurance to cover your assets. With minimum coverage you may not
have enough money to cover damages awarded by a court for injuries you caused
in an accident.
What kind of coverage is available?
An insurance policy is required by law to cover third-party liability. The
minimum amount of liability insurance needed in Alberta is $200,000.
However, 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 $10,000
in Alberta.
Here are a few other options that an auto insurance policy can cover beyond
liability:
Collision: covers damage to your car as a result of an impact with
another vehicle or object.
Comprehensive: Insures your car against damage caused by
vandalisim, theft, storms and falling objects.
Accident benefits: Pays for medical (and funeral) expenses that resulted
from inuries sustained in an accident.
Uninsured/underinsured motorists' coverage: Pays for medical (and
funeral) expenses that would have been given if the other driver were
inadequately insured.
What is an endorsement?
Endorsements are additions that can be included in your auto insurance
policy. For instance, there is an endorsement that can exclude a certain person
from driving your car. Once an endorsement is added it takes precedent over
the original insurance policy agreement.
What can affect your auto insurance rate?
Age of driver: drivers under 25 years of age pay more insurance than older
drivers. Statistically, younger drivers get into more accidents and receive more
traffic tickets. Young male drivers will also pay more than young female drivers.
Driver's record: your insurance premium goes up whenever you get into an
accident or receive a traffic ticket.
Where you live: the frequency of car theft, vandalism and medical costs in
the area where you live affects your insurance rate.
Make and model of your car: the type of car you drive affects your insurance
rates. A sports care costs more to insure than a station wagon. Statistically, a
driver of a sports car gets more traffic tickets and is involved in more accidents.
How can you reduce this rate?
The best way to reduce your insurance premiums is by being a safe driver
and avoiding accidents and traffic tickets. You can also reduce your rate by
owning a car that is cheap to insure and by taking a driver's training course.
You can also lower your premium by taking apolicy that allows you to pay a
deductible. This is when you pay a specific amount towards the cost of your
car repairs when you have an accident. The higher your deductible, the lower
your premium may be.
Does your policy cover you outside Canada?
When planning to drive your car outside Canada, make sure your auto insurance
is binding when you travel. For example, a Canadian auto insurance policy is valid
in the United States, but is not valid in Mexico.
What about a rented car?
If you are renting a car, your auto insurance will provide protection against any injuries
you cause to others or to property. It will probably not cover damage to your rental
car. To protect yourself against paying these damages, you have these options:
You can purchase collision coverage from the car-rental company. Cost varies, but
averages $10 - 12 dollars per day. This coverage is handy because if you cause
damage to the rented car it does not affect your regular car insurance premium.
You can have a special endorsement with your auto insurance policy that provides
coverage for non-owned cars. This endorsement costs about $30 per year. However,
under this plan, if you cause damage to your rental vehicle it will cause your regular
car insurance premium to increase.
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