When to get more than the minimum car insurance coverage
We know how important it is to most drivers to save money on their car insurance. If the government makes us pay for coverage, then we might as well try to make sure we keep as much of our hard earned money in our wallets as we can, right?
But sometimes, even if it feels like a pain to pay for every month, car insurance coverage can save you a lot of money and effort in the long run. The key is choosing the right coverage. In some cases, it makes sense to stick with the minimum coverage required by your province. It’s certainly cheaper from a monthly cash flow standpoint. But there are times that it makes sense to spring for a higher-priced policy in the name of better coverage.
What is minimum car coverage?
Before we get into what extended coverage can do for you, let’s review what you get with a basic auto insurance policy.
Most provinces insist on a minimum $200,000 of third-party liability insurance to cover costs just in case you are held responsible for damaging someone’s property or injuring them. Everything from the cost of repairs to legal fees to monetary settlements to the possibility of covering someone’s lost wages needs to come out of your liability coverage.
Quebec is a little different, though, because the minimum required coverage is only $50,000 thanks to government coverage of accident benefits. Nova Scotia’s minimum liability coverage, on the other hand, is higher than many other provinces at $500,000.
Why might one province feel $200,000 isn’t enough?
Damages can be devastating
Going to court isn’t cheap. For most of us, hiring a good lawyer and putting together a lawsuit is an expensive proposition that can result in financial catastrophe. Even the cost of defending yourself can sometimes be more than you can afford, depending on the outcome and the court fees involved. The right car insurance coverage can increase the chances that you aren’t left unable to get legal counsel – especially if it’s a serious lawsuit.
If you caused someone catastrophic injury, they may not be able to work and it will be your responsibility to cover lost income, sometimes for months.
Who should extend coverage?
Insurance regulations for taxis and ride-share drivers demand a much higher amount of liability coverage than the minimum, simply because the likelihood that they’ll need to use it is higher. Even if you aren’t driving for commercial reasons, you may want to extend your coverage to get better peace of mind as one bad accident can ruin your financial life if you’re not prepared.