If you don’t have the right type of auto insurance coverage, you could be left with a huge bill after a collision. Even if the collision was not your fault, you could be left at the mercy of the other driver’s insurance company.
WHY MANDATORY COVERAGE LEAVES YOU AT RISK
All drivers in Alberta must carry Third Party Liability Insurance, which protects you from having to pay to:
- repair or replace another person’s vehicle or property; and
- compensate another person for injuries suffered in the accident.
The law requires you to carry at least $200,000 of third party liability coverage, but you can carry up to $2million in coverage. Of course, the more coverage you carry, the higher your premiums will be. However, your insurance company will only pay out up to the limit of your policy.
If you only carry $200,000 in Third Party Liability coverage, your insurance company will only pay the first $200,000 in property damage and personal injuries claimed against you. If the property damage and/or personal injuries exceed $200,000, you will be responsible for paying the excess. This is why most insurance companies recommend that you carry at least $1million in Third Party Liability coverage.
Third Party Liability (commonly known as one-way coverage) does not provide coverage to repair or replace your vehicle.
Because Third Party Liability only covers damage to someone else’s car, if you are at fault for the accident you are on the hook for the cost of repairing or replacing your vehicle. You will also be on the hook for renting a car while your car is in the shop.
What if you did not cause the accident?
If the driver who caused the accident is insured, their insurance company will repair or replace your car. However, it is not uncommon for insurance companies to delay paying to replace or repair the vehicle of someone who is not insured by them. The reason for this is simple: you are not their client. So while they are required to pay for the repairs or for a new car, it can be difficult to make them pay in a reasonable amount of time. The same goes for getting a rental car. The other insurance company should pay, but they likely will not be in a hurry to help you out.
Who repairs or replaces your car in a hit and run?
If your vehicle is damaged in a hit and run, or by an uninsured driver, and you only carry Third Party Liability, you will be on the hook for the cost of repairing or replacing your vehicle, and renting a car in the meantime.
HOW CAN YOU PROTECT YOURSELF?
There are many options available to drivers to protect themselves from having to pay to repair or replace their vehicle, and even to protect them from having to wait for another driver’s insurance company to repair or replace their vehicle.
1) Collision Coverage
Collision coverage can be purchased in addition to Third Party Liability. If you purchase collision coverage, your insurance company will reimburse you for the cost of repairing or replacing your vehicle in the event of a collision, even if you caused the collision. However, this coverage does not cover the cost of a rental car while your vehicle is being repaired or replaced.
2) Comprehensive Coverage
Comprehensive coverage can also be purchased in addition to Third Party Liability. If you purchase comprehensive coverage, your insurance company will reimburse for the cost of repairing or replacing your vehicle, not only if it was damaged in a collision, but also if the damage was caused by fire, theft, vandalism, or an animal. Most comprehensive policies also include coverage for rental vehicles (SEF 20), but you should be sure to check with your insurer.
3) Endorsements
a) Rental Car – SEF 20
If you want you to avoid having to pay out-of-pocket for a rental car while your car is being repaired after a collision, you can purchase the SEF 20 endorsement to supplement the coverage options detailed above. If you purchase the SEF 20 endorsement, your insurance company will pay for a rental vehicle, taxi, or public transportation while your vehicle is being repaired.
b) Brand New Vehicle Replacement – SEF 43R
SEF 43R guarantees full replacement cost on a brand new vehicle that is written off within 30 months of purchasing the vehicle. This is particularly important where a vehicle is financed, otherwise you would be on the hook for payments on a vehicle you no longer own.
The information provided on this website does not constitute legal advice and should not be construed as such. Moustarah & Company does not guarantee that this information is accurate or up to date. As a result, should you require legal advice, please contact a personal injury lawyer.