While the insurance industry may be constantly changing and evolving, there are some questions that we hear time and time again. We are always happy to have a (socially distant) conversation with you and answer any questions you may have, we thought it would be useful to offer some general answers to our most common queries. Our talented team of experts took some time to provide answers to the top five questions, so keep reading for some useful information and give us a call if you need any clarification!
Q1) What is the difference between collision and comprehensive coverage on an auto policy?
A1) Collison and comprehensive coverage both cover the cost of repairing your vehicle, but the difference is in the circumstances of the incident that caused the damages:
Collision coverage pays for the cost of repairing or replacing your vehicle up to the actual cash value if it is in a collision with another vehicle, the ground, or an object in or on the ground, such as a guard rail. Collision coverage generally comes with a higher deductible, since the damages to your vehicle are likely to be more expensive in a collision claim than a comprehensive claim.
Comprehensive coverage pays for the cost of repairing or replacing your vehicle up to the actual cash value if its damaged by other unexpected situations, such as a falling or flying object, vandalism, fire, theft, attempted theft, natural disaster, riots or civil disturbances. Basically, comprehensive coverage is there for damages that are not the result of a collision. The cost of comprehensive coverage is generally lower, since your only real concern is the vehicle itself, and the damages are usually less expensive.
Q2) Why are my auto insurance rates increasing? I haven’t had any recent claims.
A2) You don’t need to be in an accident for your insurance rates to increase. In fact, auto rates across Canada are seeing increases right now, but this is mostly due to evolving technology.
Vehicles are now being built with high-end digital components, such as cameras, sensors, and on-board computer systems. These components are not just expensive to install, they’re expensive to replace. The parts take longer to install, forcing mechanics to spend more time on each vehicle, which keeps them in the shop longer, slowing down turnover and driving up the cost of repairs. This also means that you will need your car rental for a longer period of time, which increases the cost on your insurance company. Overall, the incorporation of digital technology has driven up repair costs by roughly thirty percent across the board, and that cost is being passed on to the consumers.
Along with the enhanced technology in modern vehicles, the cost of rehab and attendant care has increased dramatically over the past few years. If you’re in an at-fault auto accident where someone is injured, your insurance company covers the cost of their medical care, including physiotherapy and home care. With the cost of these services increasing, insurance companies have to pay out more for injuries, which are increasing rates across the country.
Q3) Can a friend or relative drive my vehicle?
A3) Yes, as long as the driver has a valid Canadian license, has your permission to drive the vehicle, follows the rules outlined in your policy and doesn’t participate in illegal activities while driving, anyone can use your vehicle. For family members, you may want to add them to the policy depending on how frequently they use your vehicle, and whether or not they have their own vehicle and insurance. If they are using your vehicle consistently, they should be listed on your policy as a secondary driver.
It is also vitally important to remember that insurance is attached to the vehicle, not the driver. So, if you let your friend borrow your vehicle, and they are in an at-fault accident, it is your policy that takes the hit. Your friend can’t place a claim on their auto policy when they are driving your vehicle, so be careful who you hand the keys to.
Q4) Does My Rental Car Coverage Cover Me Overseas?
A4) Almost always, the answer is no. Your rental car coverage only applies to vehicles in Canada and the United States. If you are travelling overseas and know that you will likely need to rent a vehicle, there is a special rider we can add to your policy if you need it, but that rider is generally more expensive than just paying for the rental insurance directly through the rental agency.
Q5) My car is old and isn’t worth much, so do I really need collision coverage?
A5) While it is not against the law to drive without collision coverage, it is highly recommended to have it. Regardless of the age of your vehicle, collision coverage is important because it covers much more than just physical damages. Collision insurance also covers tow truck charges, fire department charges and any impound charges you may face if your vehicle is in a collision. Without it, you’re most likely paying out of pocket for all those services, which may end up costing more than the actual value of your vehicle.
And there you have it, the 5 questions our brokers hear most often. Of course, we understand that no two situations are the same, so if you ever have an insurance question that needs answering, just give us a call or send an email to one of our brokers. We’re here to make sure your insurance suits your lifestyle, and part of that is making sure our clients are well informed and confident in their understanding of the insurance world. We know it’s complicated, and that’s why we’re here to help!