Comprehensive Auto Insurance: A Primer for Canadian Motorists

As its name implies, comprehensive car insurance is all-inclusive loss protection. Liability auto insurance is the “twin” counterpart of comprehensive car insurance. Although required by law, liability coverage shields you from financial liability for third-party damage or injury claims.

Conversely, comprehensive car insurance provides loss protection for damages to your vehicle in the event of certain accidents or collisions. Canadian law does not require it, although auto lien holders do. Many motorists without outstanding auto liens elect for comprehensive coverage voluntarily. There are three main components to comprehensive auto insurance polices:

1) Vandalism and Theft

Should your auto be vandalized or stolen, comprehensive coverage will reimburse your loss. If your vehicle is stolen and law enforcement is unable to recover it, comprehensive car insurance benefits would pay the full value of your car.

If your vehicle has no outstanding lien at the time of theft, benefits would be paid directly to you. If there is an outstanding lien, benefits would usually be paid to the lien holder. Any payments in excess of the lien amount would be owed to you by the lien holder. Likewise, if your vehicle is damaged beyond the point of repair in an accident, comprehensive benefits would pay its full replacement cost.

If your car is vandalized, comprehensive insurance would cover the loss. If your windows are smashed, tires slashed, or theft of any specific components occur, benefits are payable. In such instances, a deductible would usually apply before any benefits would be paid.

2) Weather

Comprehensive auto insurance benefits are payable for weather damage. If your car’s surface is damaged in a hail storm, or icy tree limbs fall onto your windshield or hood, benefits would be payable. If your car is damaged or destroyed in a flood or windstorm, comprehensive coverage would reimburse the loss.

3) Animals

If you are involved in an auto accident in which you strike a stray animal in the road, or if a bear should maul your car while you are picnicking in the woods, comprehensive protection benefits will cover your loss.

Those with outstanding auto liens must carry comprehensive coverage until the lien is paid in full. Even vehicle owners who do not have outstanding auto liens may elect for comprehensive coverage as well. Comprehensive insurance will entail an additional premium in excess of liability auto coverage. Therefore, you should carefully weigh the benefits and costs of comprehensive protection first.

Older Cars Can Often Avoid Comprehensive Insurance

Those with expensive and newer vehicles usually elect for this extra coverage, because potential losses are high. If your car is older or less valuable, you may want to avoid comprehensive coverage. The extra premiums are usually not cost-effective in such circumstances. Take some time to weigh out both options before you decide what to do. Some people don’t mind paying the extra premium costs so that they know they’ll be covered no matter what.