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What to Know About Buying Car Insurance

Moneymagpie Team 12th Dec 2023 No Comments

Reading Time: 2 minutes

Buying car insurance is an important part of getting a new vehicle. To get the right policy for you, it’s essential to understand all insurance information on buying a car. This quick guide will walk you through some important things to know about buying an auto insurance policy in Canada.

Car Insurance Is Mandatory in Canada
There Are Different Types of Car Insurance
You Can Get Car Insurance at a Dealership–But You Probably Shouldn’t
You’ll Need to Prepare Some Information to Buy Car Insurance
You’ll Pay More if You’re a First-Time Car Driver or Owner

Car Insurance Is Mandatory in Canada

If you’re thinking you should just save money and skip on car insurance, know that you may not have a choice in the matter. Canada requires all car owners to have insurance on their vehicles.

There Are Different Types of Car Insurance

There are multiple types of car insurance available, and the first step to buying one is to choose which one can provide you with the coverage that you need. Here are the most common options:

Liability insurance: This insurance can help you pay for damage and injuries caused to others (e.g. repair bills, medical expenses, legal fees). It’s required on all car insurance policies.
Collision insurance: This insurance may cover damage to your car from an accident, no matter who is at fault.
Comprehensive insurance: In certain cases, this insurance is useful in paying for repairs or replacements for your car in case of theft and problems like severe weather, vandalism, falling objects, and animal collisions.

You Can Get Car Insurance at a Dealership–But You Probably Shouldn’t

It may seem convenient to get your car insurance at the same dealership from where you’re buying your car, but this is usually not a very cost-effective option. Dealerships will most likely only be working with select insurance providers, which limits your options. It’s best to check out rates from various car insurance companies and then obtain your policy directly from them for a better deal.

You’ll Need to Prepare Some Information to Buy Car Insurance

Once you’re ready to buy car insurance, you’ll need to gather some personal information about yourself and any other drivers that will be listed on your plan. These include:

Driver’s license numbers
Birthdates
Garaging address (i.e. home address)
Vehicle identification number (VIN)
Vehicle dates (year, make, model)
Distance driven in kilometres to work and annually
Driver’s abstracts
Details on tickets
Current policy number and renewal date (if any)
Years of prior insurance

You’ll Pay More if You’re a First-Time Car Driver or Owner

Car insurance is typically more expensive if you’re a first-time car owner or a new driver. This is because you’re more of a risk in the eyes of insurance providers because they have little information about how you’ll do on the road. You’re also more likely to file a car insurance claim than an experienced driver might be.

First-time car owners, particularly those who have newer vehicles, will also get higher premiums because newer cars are usually more expensive to fix than older ones. Other factors that can affect the price of your car insurance include your age, marital status, postal code, and credit score, among others.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.