In addition, some provinces have government run systems, private insurer systems or a combination of government and private insurers.
Whatever the case, the main coverage for car insurance combine: Third-Party Liability, Accident Benefits and Own Damage coverage.
Third Party Liability
This coverage is mandatory in Canada and covers the insured for damage or bodily injury to a third party. Each province outlines the minimum limits required by law. In practice, this coverage starts at $1,000,000 but more today often is recommended at $2,000,000 or more depending on the use of the vehicle.
Own Damage Coverage
This is coverage for your own vehicle. This coverage can be separated into Collision and Comprehensive coverage. While collision coverage seems self-evident, Comprehensive coverage is designed to cover not collision type claims such as: fire, theft, vandalism and water damage. This coverage is optional but most vehicle owners prefer to buy the coverage to protect their investment. If the vehicle is leased or a loan has been used to buy the vehicle, the lessor or lender will make this coverage a requirement.
Replacement Cost: Basic car insurance is offered on a depreciated basis. This means that at the time of a loss, the policy states that the claim will be paid on the “Actual Cash Value” of the vehicle. Since car depreciation occurs relatively quickly, the value at the time of a claim may be significantly different from the amount you paid for the new car a couple of years ago. Replacement cost coverage may be available, as an option.
Loss of Use: To cover the expenses of a rental car (or similar expenses) if your car is unavailable due to a covered claim.
Legal Liability for Non-Owned Autos: Extends your policy coverage for vehicle damage for a replacement car, for instance a rental vehicle while on vacation.