AUTOMOBILE INSURANCE PLAN
What Is an Automobile Insurance Plan?
Most states mandate a minimum amount of auto insurance; therefore, there needs to be an option for drivers to get car insurance coverage in the event that they are denied by providers in the standard market.
States that have an automobile insurance plan typically require all auto insurance companies that do business in that state to participate in the plan.
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Costs of an Automobile Insurance Plan
Car insurance rates are always difficult to predict, as many factors go into determining what should be paid for car insurance coverage.
However, because these programs are meant for high-risk drivers, the rates are likely to be much higher in comparison to standard car insurance premiums.
Auto Insurance Plans
While insurance plans vary by province, these are the most common types of insurance that should be gotten before using vehicles. Make sure to check the following when comparing auto insurance quotes:
Liability: If one is in a car accident and held legally liable for other people’s injuries, or for damage to another person’s vehicle or property, one’s insurance company will pay up to the total amount listed on the policy. The one involved is responsible for amounts above that limit.
Accident Benefits: This covers medical expenses not covered by a provincial health plan, plus loss of income as the result of an auto accident. In some provinces, one may be entitled to additional benefits if he/she is someone’s caregiver. Accident Benefits are paid regardless of who was at fault in an accident.
Uninsured Automobile: Protects an individual and his/her family if injured or killed by a hit-and-run driver or by an uninsured motorist. It also covers damage to an individual’s vehicle caused by an identified uninsured driver.
Direct Compensation Property Damage (DCPD): Available only in New Brunswick, Nova Scotia, Ontario, P.E.I. and Quebec, this covers the cost of loss or damage to one’s car in an accident for which he/she was not entirely responsible. To qualify, the other driver has to be identified, insured and found to be at least partially at fault. In some provinces, the individual can no longer sue another person for damage to his/her car.
The individual’s insurance company will look at the degree to which he/she is responsible for the accident and the individual’s deductible to determine how much compensation to be received. Payment can come if the individual was partly or not at all responsible for the accident. Be sure to review car insurance policy for specific details, restrictions, and exclusions.
One may want additional coverage to be sure of full protection in case of an automobile accident, theft or damage. Here are some coverage options to consider:
Collision: the individual is covered for the cost of repairs or replacement of car in the event of a collision where the individual is partially or totally at fault.
Specified Perils: This covers for specific perils such as fire, lightning, theft*, windstorm, earthquake, hail, explosion, riot, and others.
Comprehensive: With this option, the individual is covered for any threat or danger other than collision, including theft*, damage or loss caused by vandalism, projectiles, and falling or flying objects such as stones kicked up by a truck in front of the individual. The important thing to remember is that this coverage applies to one’s vehicle only, not him or his/her passengers.
*Comprehensive and Specified Perils do not insure one’s car against theft if a member of his/her household steals his/her car, or if an employee whose job involved using or maintaining the car steals his/her vehicle.
All Perils: This is the most complete Loss or Damage coverage available. All Perils combines Collision and Comprehensive coverage and protects against theft by a person who lives in one’s household or an employee who steals one’s vehicle.
The most popular combination is Collision and Comprehensive coverage.
Optional coverage with endorsements
For extra protection, add the following to your insurance policy:
Accident Forgiveness: If an individual has this coverage on his/ her policy, one’s first accident won’t affect his/her insurance rates, provided he/she have been licensed and accident-free for six years..
Loss of use: If one’s car is damaged in an accident, stolen or destroyed, this endorsement covers the costs of temporary transportation such as renting a car or taking a bus. The individual will be covered up to the maximum amount specified in his/her policy until his/her car is recovered, repaired or replaced, or the claim is settled.
Legal liability for damage to non-owned automobiles: This endorsement will cover an individual if he/she damages a car not owned while it was in his/her care and control, such as a rental car.
Family protection endorsement: Receive additional benefits if involved in an accident with a driver who doesn’t have enough coverage to pay a claim for injury or death. This only applies if the other driver has less insurance coverage than the individual involved
Additional coverage: one can also buy insurance for a stereo or other components installed in his/her vehicle
Limited waiver of depreciation: This coverage protects against the loss of value or depreciation of a new car if, as a result of an accident, the individual’s car is beyond repair and must be replaced. This coverage is only available during the first two years of a vehicle lease or ownership.
One could receive an amount up to the price paid for the vehicle or the manufacturer’s suggested price. He/she can only add this endorsement if he/she has insured his/her vehicle with Collision and Comprehensive coverage, Collision and Specified Perils coverage or All Perils coverage.
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Automobile insurance plans were designed for one reason, to insure one’s life and his automobile. Through this type of plan, the risk of covering a “high-risk driver” is shared amongst all participating car insurance companies.