With all of the concern these days about automobile insurance premiums in Ontario, we thought it might be an idea to give a better understanding of how a typical total auto insurance premium breaks down by coverage. In this case, the total annual premium is $2261 but when illustrated by coverage type it becomes much clearer where the major risk areas are.
For these major premium areas especially, consider the financial consequences of having several people in a car injured and looked after under Accident Benefits, for example, or the potential liability suit if a pedestrian was hit and seriously injured.
The following illustration (rates as of Oct 2013) is based on a 2013 Chevrolet Cruze, LS, 4-door. There are 2 drivers each with 20 + years of driving experience and with a 3-year ticket free and 6 year claim free record. The territory is in one of the many sub-territories in Toronto. The use of the vehicles includes commuting under 5 kms each way with about 15,000 kms annually. There are no other e.g. multi-policy, renewal, loyalty, etc., discounts.
* (M) denotes a mandatory coverage (O) denotes an optional coverage
$1,000,000 Third-Party Bodily Injury Liability - $637 (M)
- This section of your automobile insurance policy protects you if someone else is killed or injured. It will pay for claims as a result of lawsuits against you up to the limit of your coverage, and will pay the costs of settling the claims. By law you must carry a minimum of $200,000 in Third-Party Liability coverage.
$1,000,000 Third-Party Property Damage Liability - $9 (M)
- This section policy protects you if damage someone elses property. It will pay for claims as a result of lawsuits against you up to the limit of your coverage, and will pay the costs of settling the claims. By law you must carry a minimum of $200,000 in Third-Party Liability coverage.
Direct Compensation PD - $0 deductible - $362 (M)
- This covers damage to your vehicle or its contents, and for loss of use of your vehicle or its contents, to the extent that another Ontario insured person was at fault for the accident. It is called direct compensation because even though someone else causes the damage, you collect directly from your own insurer, instead of the person who caused the damage. For example, you are rear-ended and your vehicle sustains major damage. Your insurer pays for your vehicle under this section and cannot recoup from the "at-fault" party.
Accident Benefits - $876 (M) - pays for bodily injuries e.g. to occupants, regardless of who is at fault.
- This section of an automobile insurance policy provides you with benefits if you (or occupants) are injured or killed in an automobile accident, regardless of who caused the accident including supplementary medical, rehabilitation, attendant care, caregiver, funeral and non-earner and income replacement benefits.
Collision - $1000 deductible - $209 (O)
- This coverage pays for losses caused when an insured vehicle is involved in a collision with another object, including another vehicle, or rolls over. "Object" includes: another vehicle or a trailer that is attached to the vehicle that is covered by your insurance policy; the surface of the ground, and any object in or on the ground.
Comprehensive - $500 deductible - $61 (O)
- This coverage pays for losses, other than those covered by Collision or Upset, including perils listed under Specified Perils, falling or flying objects, missiles and vandalism e.g. theft, fire.
Uninsured motorist - $17 (M)
- Protects you and your family if you are injured or killed by a hit-and-run driver or by an uninsured motorist. It also covers damage to your vehicle caused by an identified uninsured driver.
Underinsured motorist - OEF 44 - $17 (O)
- This coverage protects you, or an eligible member of your family, to the same limits as your Third-Party Liability coverage if you are involved in an automobile accident where you are not at fault, with someone who carries less insurance, no insurance, or is an unidentified driver (e.g., hit and run).
Loss of Use - OEF 20 - $40 (O)
- This coverage option covers the cost of a rental vehicle while your vehicle is being replaced or repaired, if the damage or loss is caused by a peril for which you are insured.
Damage to non-owned autos - OEF 27 - $33 (O)
- This endorsement/option provides physical damage coverage to vehicles that you may operate but do not personally own – such as a vehicle that you have rented or borrowed – subject to a deductible.
Total premium - $2261
This is a plain language summary of some of the various Ontario Automobile coverages available. As the policy itself is a statutory document, it is important that it be referred to for a complete understanding of all terms, conditions, limitations and exclusions.