Car Insurance Canada

Insurance Coverage Definitions, Car Insurance Coverage

Third Party Car Insurance
Auto insurance coverage is packaged into different coverage types. It is usually easiest to determine what you are required to purchase. Then, you determine what you have that needs to be protected. You purchase insurance to protect yourself and your family in the event that you suffer a loss to your person or property and you purchase insurance to protect yourself (your family) from losses suffered by others. Below is a breakdown of each car insurance coverage type to help you understand more about what each type of coverage protects. Next to each type is a term that is usually associated with that coverage type (i.e. BI and PD).

Bodily Injurily Liability (BI)

Covers other people's bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets. Bodily injury liability covers injury to people, not your vehicle. Therefore, it is a good idea (and usually a company requirement) to have the same level of coverage for all of your cars. Bodily Injury Liability does NOT cover you or other people on your policy. Coverage is limited to the terms and conditions contained in the policy. It is mandatory in most states.

Essential things to keep in mind when selecting your Bodily Injury limits:
If you select limits that are too low, you could be putting yourself at risk financially.
For example, if either you or a driver covered by your policy cause a serious injury where damages exceed your limits, you will be held responsible for the amount above your limits. To make that payment, you could be forced to liquidate property, savings, and other assets, or your future earnings could be attached. By purchasing liability limits to account for both your current assets and future net worth, you can help protect yourself against this risk.

Property Damage Liability (PD)

Covers you if your car damages someone else's property. Usually it is their car, but it could be a fence, a house or any other property damaged in an accident. It also provides you with legal defense if another party files a lawsuit against you. It is a good idea to purchase enough of this insurance to cover the amount of damage your car might do to another vehicle or object. Coverage is limited to the terms and conditions contained in the policy.

How much protection does this coverage provide?
The coverage limits refer to the maximum amounts that will be paid per accident.

Essential things to keep in mind when selecting your Property Damage limits:
If you select limits that are too low, you could be putting yourself at risk financially. For example, if either you or a driver covered by your policy cause a serious accident where damages exceed your limits, you will be held responsible for the amount above your limits. To make that payment, you could be forced to liquidate property, savings, and other assets, or your future earnings could be attached. By purchasing liability limits to account for both your current assets and future net worth, you can help protect yourself against this risk.

Rental Car Reimbursement (RREIM)

Covers renting a car if your car is not drivable or while your car is being repaired because of a covered accident.

Towing and Labor (TL)

Also, referred to as Tow Club, Emergency Road Service, Emergency Roadside Service.
Coverage is only available if you purchase Comprehensive and/or Collision Coverage. Some policies limit coverage to pay only when a claim has been issued against your physical damage coverage (an accident). Coverage limits are different for each carrier, but typically, this is what is covered.

Accidental Medical Protection Plan (AMPP)

Also referred to as Accidental Death and Dismemberment
Covers you (or family under a Family Plan) while driving or riding in any private passenger vehicle. Defined accident medical expenses are paid directly to you without a deductible.

Property Protection Insurance (PPI)

This is required coverage in Michigan. It provides protection if you cause damage to properly parked vehicles or fixed properties such as buildings or lampposts in the state of Michigan.

Accidental Death Benefit (ADB or ADD)

Also, referred to as Accidental Death, Accidental Death Indemnity
A death benefit pays if bodily injury causes the death of you or a covered family member.

Custom Parts and Equipment (CPE)

Also, referred to as Additional Customized Parts Or Equipment, Customized Parts and Equipment, Electronic Equipment
Covers if your vehicle has permanently installed custom parts or equipment other than those installed by the original manufacturer.

Discount Auto Insurance Eligibility list

Before looking into discounts, make sure you do a thorough job comparison shopping. Get at least three quotes from three different companies because rates vary greatly from insurer to insurer. Be sure the policies for which you are getting quotes have the same deductibles and the same terms so you can accurately compare rates. Most auto insurance companies offer discounts to their drivers under certain conditions. To get the most bang for less bucks, go through the following items on the checklist below to see if you qualify for one or more discounts!

1. Researching multiple policies. If you have homeowner’s insurance or renter’s insurance, consider obtaining your auto insurance from the same company. Many companies will often offer a discount on both your home and auto insurance if you take out both policies with them.

2. Having a good driving record. Policyholders who have not had an accident or a moving violation for a set number of years are often eligible for further discounts. The discount varies from insurer to insurer.

3. Being a good student. Insurance companies consider honor students to be more responsible drivers. They often give a discount for good grades to students that you have added on your policy.

4. Taking a defensive driver’s course. Policy holders who voluntarily take a defensive driver’s course are often eligible for a discount on their insurance. If the defensive driving course was required because of traffic violations, however, a discount is usually not given.

5. Having low mileage. Some insurance companies give discounts to drivers who drive below the average number of miles per year than others drive.

6. Carpooling to work. Those who carpool use their cars less often. Some insurers see this as a lower risk and therefore offer a discount.

7. Having good credit. Auto insurance companies are beginning to base their rates on credit scores. Keeping your credit score as good as it can be may get you a better rate.
Your auto insurance company may offer these and other discounts, but they don’t always let you know about them upfront. Ask your insurance agent what additional discounts the company offers its drivers.

Comprehensive Coverage (Other than Collision, OTC, COMP)

Covers your vehicle, and other vehicles (in limited scenarios) you may be driving for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals. It pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket. Coverage is limited to the terms and conditions contained in the policy. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.

Collision Coverage (COMP)Covers damage to your car when your car hits, or is hit by, another vehicle, or other object. Pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car. Coverage is limited to the terms and conditions contained in the policy. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.

Underinsured Motorist Bodily Injury (UNDUM)

Covers you, the insured members of your household and your passengers for injuries, damages or death caused by the negligence of a person with insufficient insurance. If you have an accident with a person whose coverage cannot meet your damages, your policy will meet the difference-up to the limit of liability listed on your policy.

Uninsured Property Damage (UMPD)

Covers your auto when property damage is sustained by an insured and the negligent operator does not possess insurance.

Underinsured Motorist Property Damage (UNDPD)

Covers when property damage is sustained by an insured and the negligent operator possesses insurance, but the limits of liability carried by the negligent driver are not sufficient to cover the damages.

Personal Injury Protection Coverage (PIP-MEDEX)

Covers within the specified limits, the medical, hospital and funeral expenses of the insured, others in his vehicles and pedestrians struck by him. The basic coverage for the insured's own injuries on a first-party basis, without regard to fault. It is only available in certain states. Depending on the state, the covered parties below and the amount of protection may vary.

Basic and Additional Reparation Benefits (BRP or PIP)

Basic Reparations Benefits will cover medical up to the selected amount. In some states, Additional Reparations Benefits is available to extend additional benefits. Additional Reparations Benefits is usually primary over any Health Insurance. This coverage is optional and you cannot have Medical Payments with this coverage.

First Party Benefits - Medical (FPB or MEDEX)

First Party Benefits cover several areas of insurance coverage; however, this definition is for First Party Benefits-Medical. Similar to medical payments coverage and Personal Injury Protection, FPB helps pay for your medical expenses if you or relatives living in your household are injured in an accident. Specific limits and coverages vary by state, but typically these services include:

1. Related medical and surgical treatment
2. Essential rehabilitative services (physical therapy, speech pathology, etc.)
3. Necessary dental, psychiatric, psychological, and optometric treatment
4. Ambulance and nursing service
5. Required medications, medical supplies, and prosthetic devices

Medical Payments (MEDPM)

Covers medical expenses to you and your passengers injured in an accident. There may also be coverage if as a pedestrian a vehicle injures you. This coverage applies, regardless as to who is at fault. Medical Payments may also cover policyholders and their family members when they are injured while riding in someone else's car or when a car hits them while on foot or bicycling. Coverage is limited to the terms and conditions contained in the policy.

Loan/Lease Gap Insurance (LLG)

Also referred to as GAP, Loan/Lease Payoff

Loan/Lease Gap Coverage is optional. To buy this coverage, you must have Collision coverage and Comprehensive coverage. You must have a deductible and your car must have a lien holder because it is financed or leased.

This coverage protects you if your car gets damaged and will reimburse you for the difference between the following items:

The actual cash value of your car at the time of the loss, less the applicable deductible and the vehicle's salvage value (if retained by the owner or insured) and;
Any greater amount owed on the vehicle at the time of loss, less any unpaid finance charges, excess mileage or wear and tear charges, any other charges or expenses associated with the loan or lease, and the vehicle's salvage value (if retained by the owner or insured).

Car Insurance Savings Tips

1. Raise your deductible. Your deductible is the amount you pay when you make a claim before your insurance company pays. The disadvantage of raising your deductible is that when you do make a claim, you’ll pay more. The advantage is that your annual insurance costs go down. You can raise your deductible on the comprehensive and collision sections of your insurance policy.

2. Drop your collision and/or comprehensive insurance on older autos. If your car is not worth much to begin with, then it may not be worth paying for collision and comprehensive insurance. That is because the amount you pay for the deductible plus the amount you pay for the insurance may be more than the value of the car itself. An auto dealer or Kelley Blue Book can help you determine the value of your auto.

3. Buy a "lower profile" vehicle. Part of what determines the cost of insurance is the kind of vehicle you drive. Some models are common targets for auto theft, while some models are just more expensive to repair. Generally these vehicles will cost more to insure. It pays to do your research before you buy.

4. Take full advantage of low mileage or distance discount rating. Some insurance companies give discounts to people who drive less than a pre-determined number of miles each year or drive certain distances to and from their place to work.

5. When you move, consider the cost of insurance. Yes, the cost of insurance varies from place to place. Some areas can be considerably higher. Make sure to keep your insurance broker informed, as this could save you money.

5. Make sure the information about your vehicle is correctly listed on your policy. You would be surprised how many inaccuracies show up on a policy, especially with so many model names sounding very similar. Insurance rates vary depending on model, and you could be paying more for a car you’re not even driving! Other common errors include the wrong mileage and mistaking a four-door vehicle for a two-door (both of which can also affect insurance rates).

6. Research the bevy of discounts available. Insurance companies also reward people who insure both their homes and cars with them. This is called a multi-policy discount. Other discounts available may include multiple vehicles, anti-theft devices, retirees, driver education, abstainers from alcohol, age, and distance to university/colleges for students.