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April 16, 2012
"One Way" May Not Mean The Right Way

You would expect to hear, “one-way only, please” more often as a travel agent than as an insurance broker. However, we get this request daily. It’s surprising how many times it comes to light, when discussing coverage for an auto insurance policy.  In general, when discussing coverage try to avoid common slang such as, "one way", "basic", or "full coverage". These terms have been adopted by the public to describe various coverage arrangements but have no recognized concrete definition in the insurance industry. They are too vague and can lead to confusion and ultimately you not getting the coverage you need.

In Ontario auto insurance is mandatory but there are options as to the amount of insurance and type of coverages you need. Liability, Accident Benefits, Uninsured Automobile, and Direct Compensation Property Damage are compulsory coverages. You MUST have them or risk vehicle impoundment and a sizeable fine. You can however choose whether you carry more then the minimum limits.

Collision and Comprehensive are optional coverages, that is unless they are required as a condition of your financing/lease agreement. You can elect to add these to your policy or not. There are also endorsements available that can be added at your request, such as extending your policy to cover damage to a rental car, waiving the depreciation on a brand new car, or protecting your good driving record with a forgiveness endorsement.

When comparing the price of a policy covering Liability Only versus Liability with Collision & Comprehensive, the difference is almost always a significant amount of premium. Many people, who are on the fence about what additional coverages they need, decline all of the physical damage coverage just to save some money. What is not often discussed is the option of adding only Comprehensive coverage. It is usually available with or without Collision which is typically the more expensive of the two. This can provide some savings without leaving you holding the entire bill for a theft or vandalism claim.  Another option in place of Comprehensive is Specified Perils.  It is very similar to Comprehensive but it does not include: vandalism, falling/flying objects, or missiles, where Comprehensive does. Therefore, it is also a reduced price vs. comprehensive.

Specified Perils on it’s own is what is commonly called, "parking coverage", though this is a bit of a misnomer as it doesn't really cover everything that can happen to your car when it is parked.

If you aren’t in the habit of getting a new vehicle every 10 years or so, you are soon likely to have a discussion about the optional physical damage coverages as many insurance companies are shying away from offering these on older cars. Most have a predetermined vehicle age (usually 12-15 yrs old) at which time they may require pictures of the car from all angles and some may even request a current safety certificate before they will offer physical damage coverages. And those are the reasonable companies. Some will not offer physical damage coverages if your car is over 10-12 years old, period.

If you are insuring with a bank, direct writer, or captive insurance agent, they will only propose coverage based on the rules of the single company they represent - one of their many downfalls. So you may hear, "full coverage is not available because your car is too old". Do not take that as a blanket statement which applies to all insurance companies. If you are being told you can't get the coverage you asked for, the next question you need to be asking is, "is this coverage available elsewhere in the insurance market". To best answer that question - call a broker. Insurance brokers represent multiple companies and can likely find you a policy with all the coverages you want and need.

Remember, when discussing a potential policy, you have to make decisions about  Liability, Accident Benefits, Collision, Comprehensive, & additional endorsements. So, take the time and talk about them all. If the company you are insuring with doesn't require a signed application when putting your policy in place, request a break-down of the coverages you've selected, IN WRITING! Sometimes waiting until they mail you a policy is too late!