How To Get Car Insurance (5 Easy Steps)

Here’s the information you’ll need to jump-start a car insurance shopping journey:

• Basic information like your name, address and date of birth for every driver on the policy.
• Driver’s licence information for every driver on the policy, including number of years each have been licensed.
• Vehicle information, including year, make, model and vehicle identification number (VIN).
• Your driving habits, including distance driven one-way to work and annual mileage.
• Driving history for all drivers on the policy, including at-fault accidents, traffic violations, claims and any completed safe-driving courses.
• Your current insurer (if you have one), including your current coverage limits.

The Financial Services Regulatory Authority of Ontario provides this handy checklist.

Before you buy a car insurance policy, the first step is to figure out how much car insurance you need. If you buy too little coverage, you could be woefully underinsured. But if you buy too much, you’ll be overpaying.

Here are some common coverage types you’ll need to consider.

Third-Party Liability Car Insurance

If you cause a car accident, third-party liability car insurance pays for property damage and injuries to others, such as their car repair bills. It also covers legal expenses if someone sues you because of an accident.

Third-party liability insurance is mandatory across Canada and each province has its own minimum requirement. For example, in Alberta the minimum is $200,00, while in Nova Scotia the minimum is $500,000. There may also be caps on how the maximum is allotted. In Ontario, for instance, if a claim involving both bodily injury and property damage reaches the $200,000 minimum, payment for property damage will be capped at $10,000 and the balance will be attributed to the bodily injury claim.

But here’s the problem: The minimum required amount of liability insurance required by each province is generally inadequate. For example, if you bought the minimum amount in Ontario and caused a car crash that resulted in multiple injuries and more than $200,000 in damage and lawsuits, you’d be on the hook for an amount above that minimum.

A good rule of thumb is to buy enough liability insurance to cover what you could lose in a lawsuit.

Accident Benefits

This coverage pays for medical costs, rehabilitation expenses and financial compensation, including income replacement, if you are injured in a collision regardless of who caused the accident. It also covers funeral expenses and payments to your survivors if you are killed in an accident.

This coverage is mandatory across Canada, except in Newfoundland and Labrador, and you can increase the standard minimum.

Direct Compensation-Property Damage (DCPD)

This covers the damage to your vehicle and its contents when another driver is at fault for an accident. It’s called direct compensation because you collect from your own insurance company, rather than the at-fault driver. There may be a deductible for this coverage. DCPD is currently mandatory in Nova Scotia, Ontario, New Brunswick, Newfoundland and Labrador, PEI, Quebec and Alberta.

Uninsured Automobile Coverage

Driving with valid auto insurance is the law. But while numbers are hard to come by, there are still drivers who get behind the wheel without insurance. And some drivers have insurance but not enough to cover an expensive car accident. So what happens if an uninsured or underinsured driver crashes into you?

Uninsured automobile insurance protects you from injuries or damages if you’re hit by an uninsured motorist or an identified hit-and-run driver and they’re considered at fault. Uninsured automobile is mandatory in most provinces and part of a standard policy. Injuries are typically covered under the accident benefits of your policy, but uninsured automobile coverage can be used for any claims above that minimum. It also protects you from damage to your car, unless the incident was caused while your car was parked, for instance, and then you’ll need to make a claim under the comprehensive portion of your insurance.

Collision and/or Comprehensive Insurance

If you want coverage for car repair bills for your own vehicle, you’ll want to buy collision and/or comprehensive insurance, which are both optional, except in Manitoba and Saskatchewan. While two these coverage types are often sold together, they cover two different groups of problems:

• Collision insurance helps cover your car repair bills for accidents such as crashing into another car or backing into a pole. If someone else crashes into you and is responsible for your car repairs, you could make a claim on their liability insurance rather than using your own collision coverage.
• Comprehensive insurance pays your car’s value if it is stolen and helps pay for car repair bills for problems such as falling objects, collisions with animals, fires, floods, hail, vandalism and theft.

If you have a car loan or lease, your lender or leasing company will likely require that you carry both collision and comprehensive insurance.

Optional Coverage Types

In addition to the standard auto insurance options, you may want to buy extra coverage, often called endorsements, to ensure you’re fully protected:

• Transportation replacement. Also known as Loss of Use in Ontario, if your vehicle is out of commission because of a problem covered by your policy, rental reimbursement insurance pays for the cost of a rental while your car is being replaced or repaired.
• Accident waiver/forgiveness. Your premiums will typically increase after an at-fault claim, but with this endorsement you get a break for your first.
• Removing depreciation deduction. When you submit a claim, your insurer pays out for the value of your car, less its depreciation amount. This add-on ensures your insurer pays out for the full purchase price.
• Family protection coverage. This endorsement provides additional coverage if you are in an accident with an uninsured driver or are the victim of a hit-and-run.

When you have determined how much car insurance you need, the next step is to compare car insurance quotes from multiple insurance companies. (A good rule of thumb is to get three quotes.) Car insurance rates can vary a lot from insurer to insurer for the exact same coverage, so don’t skip this vital step.

You can get free quotes:

• Online. If you prefer to shop from your couch, you can find free car insurance by going to an insurer’s website or using a comparison site that lets you compare multiple policies all at once.
• An insurance agent. If you prefer to talk with someone, you can speak with an insurance agent. An insurance agent generally represents one insurance company.
• An insurance broker. As an insurance broker represents many different companies, he or she can do much of the legwork for you, providing you with the best rate from the companies they represent.

Once you identify the company and policy you want, it’s time to make an auto insurance application.

Some insurers will offer a discount if you pay the full term up front. If you don’t want to pay in full, you can typically choose monthly instalments. You might be able to get another small discount for using automatic withdrawals.

When you have a policy the insurance company will send you proof of insurance via email or mail. Some insurers have a mobile app that downloads your proof of insurance.

If you are purchasing a new or used car, most provinces require proof of insurance before you can register the vehicle and drive it off the dealership lot.

If you already had insurance in place on your current car, make sure your new coverage is active before cancelling the previous policy. You should get a refund for the unused months on the old policy.

Make sure you get confirmation that your policy was cancelled.

If you cancel auto insurance before the new coverage is effective, your car will be uninsured, which can have serious legal and financial consequences if you get into a car accident—meaning you will have to pay for all damages and expenses out-of-pocket, and you could be ticketed for driving uninsured. You may also have to pay more for your new policy, as a lapse in coverage can hike rates.

Whether you’re a car insurance newbie or an expert, here are some helpful tips worth considering when buying a car insurance policy.

1. Look for Ways to Cut Car Insurance Costs

There are ways to save on car insurance, such as:

• Bundle your insurance. Also called a “multi-policy discount,” this is when you buy more than one type of policy from an insurance company. It’s typically one of the best discounts you can get. For example, you can bundle auto and home insurance.
• Ask for discounts. Insurers offer a wide variety of car insurance discounts, such as discounts for insuring multiple cars, vehicle safety features, anti-theft devices, good driving, being a good student and professional organization or alumni discounts.
• Increase the deductible. The higher your insurance deductible for comprehensive and collision insurance, the less you’ll pay in premium. That’s because your insurer will pay less if you file a claim. For example, you can increase your deductible from $500 to $1,000 (or more). Just keep in mind, if you choose a high deductible, you’ll be responsible for paying that amount out of pocket if you file an insurance claim.
• Minimize optional coverage on older vehicles. In some instances, it doesn’t make financial sense to pay for certain optional coverages, such as comprehensive, for an older car.

2. Keep Your Coverage Options Open

It’s good to regularly review your auto insurance coverage to make sure it still meets your needs. The policy you bought 10 years ago may no longer be adequate or competitively priced. For example, the amount you drive each day to work has an impact on your insurance premium. If you recently switched jobs and now work full-time from home, that can reduce the amount you pay each month.

3. Look Beyond the Price

Sure, you want to find car insurance at the best possible price. But cost isn’t everything. If you have to file a car insurance claim, you want an insurance company that has a solid reputation for customer service.

The best car insurance companies combine good service at a competitive price.