Auto insurance policies shield you against vehicle-related losses and liability. Prudent motorists purchase auto insurance policies to avoid catastrophic losses and liability. Governments require this coverage of all motorists who operate vehicles on its roads. Each province has its own legally-required limits for liability auto insurance.

Saskatchewan, British Columbia, and Manitoba require proof of basic liability insurance prior to auto registration. In these provinces, government insurers provide the required minimum liability coverage. In provinces where private insurers provide this coverage, certain terms and conditions must be included in policies.

Basics of auto insurance

When an insurer issues a policy, it assumes certain risks. In essence, the company becomes your proxy. It stands in your financial stead should certain losses occur. In exchange for this umbrella of security, it charges a fee.

Known as a “premium," this fee reflects the relative risk that you present. The higher the risk, the higher your premium. Insurers determine risk levels from large amounts of statistical data collected over long periods of time.

Such studies encompass all aspects of auto-related data. Incidence of theft, collision, and accident by geographical location; age group, gender, and prior driving history are calculated. Vehicle specifics are also factored in.

Materials used to manufacture various automobiles vary widely in price and quality, as does replacement vehicle cost. Repair and replacement costs are much higher for a brand-new a Cadillac or Porsche than for a ten-year-old subcompact.

Moreover, the cars driven unusually long distances have increased chances of accident involvement. Business use increases liability exposure due to higher damage claims and the greater chances of an at-fault accident occurring.

Insurers know that loss is inevitable. They fully expect to pay out a certain amount in claims annually. As businesses, they calculate the amount they must have to cover these claims, plus overhead and add something for profit. This is your premium for the year.

Claims filing and processing

Should a loss occur, the insurer takes immediate steps to assess total damages. Specialized insurance professionals known as “adjustors” survey property damage and calculate total loss sustained via standardized industry procedures and publications. If you disagree, you are may choose to decline the insurer’s offer and begin legal proceedings to collect the full amount you feel is due.

Third parties who sustain loss or damage in accidents or collisions wherein you are at-fault have the same options. Failure to reach mutual agreement with the insurer often leads to litigation whereby the parties seek to have damages assessed via court action. Most such cases eventually end with out-of-court settlements prior to trial.


Loss is an inevitable part of life. Although you cannot completely avoid it, minimize its impact with adequate auto insurance coverage. The priority must always remain the security of you and your loved ones. Such values are priceless and well worth any insurance premium.

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