Auto Insurance

Insurance is as much of a necessity of owning a car as gas. You simply cannot do without it. As a matter of fact, it's the law.

You cannot register a car without insurance. And if coming up with the funds to pay insurance premiums seems like one more hand reaching into your pocket, remember this: Insurance isn't about what you can afford. It's about what you can't afford.

What is Insurance?

Insurance is almost a reverse gambling concept. You keep putting money in a pot to avoid hitting the big jackpot: an expensive accident settlement.

An insurance company adds up all the accident claims it expects to pay, and divides that amount among all the people that pay into the pool. The basic principle of insurance, then, is that the losses of the few are shared among the premiums of the many. Of course, each insurance customer isn't charged equally. Your rates are determined by how likely you are to have a claim. And that conclusion is reached through an examination of basic demographic and driving statistics. These are called statistical risk factors.

Auto insurance is a much more complex concept to wrap your mind around than home insurance is. While little variation is permitted within each province and territory, there can be huge differences between jurisdictions. Complicating matters further is the level of competition in this field. While home insurers compete on coverage, service and price, automobile insurers compete mainly on service and price.

Where do rates come from?

Within reasonable limits, some of which are prescribed by law, a policyholder's premium reflects the risk associated with that policy. Beyond that, your rates are determined based on three principle things: who you are, your driving history and how extensively you want to be covered. More specifically, the following factors have a great influence on your rates:

Other Rating Factors

Factors such as geography, climate and traffic congestion also play a role in calculating a person's premium costs.

Buying Insurance

Types of Insurance

There are so many variables with insurance that the best way to find out which is right for you is to ask your agent. But if you understand the basic coverage parameters, you will be in a better position to discuss the subject.

Other Coverages

There are many other types of coverage you may or may not want including towing, labor, temporary-replacement vehicles, etc. Talk these over with your insurance agent to see which are right for you.

Ways to Save on Insurance

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