How Much Car Insurance Do I Need?

Mistakes are inevitable, and each has a cost depending on the circumstances. Some take little to correct, but others, such as a serious car accident, can have profound financial consequences in paying for damages and injuries.

Insurance helps minimize these consequences and ensure mistakes don’t financially cripple or destroy you. So, it’s of the upmost importance that vehicle owners don’t make the preliminary mistake of failing to choose the appropriate third-party liability insurance.

What is TPL?

TPL is insurance coverage for the vehicle owner and anyone else permissibly driving your vehicle. Here are some fast facts to know:

• It covers property, bodily injury, and death damage claims made by third parties against you.
• It covers the legal fees incurred by insurers when they must hire a legal team to defend a claim brought against you.
• It also covers passengers in your vehicle, meaning that others and even yourself may need to bring a TPL claim if you’re injured as a passenger in your car.
• It’s part of the standard automobile insurance policy required of all automobile owners in Ontario.
• The minimum mandatory amount of TPL is just 200,000.

The minimum required is often not enough to properly protect yourself. Most vehicle owners in Ontario carry at least a million in TPL voluntarily to protect themselves, and, as you’ll see in a moment, even that may not be enough.

Other coverages Ontario auto owners have

In addition to TPL, Ontario vehicle owners must have three other mandatory coverages within their automobile insurance policy:

1. Accident benefits or no-fault benefits

These are outlined in the SABS (Statutory Accident Benefits Schedule), and they include benefits such as income replacement, medical and rehab care, and attendant care expenses. What you should know:

• The benefit has a maximum amount and is subject to rules and restrictions.
• Regardless of fault, these coverages are available to you, passengers, and other parties involved in the accident.

While Ontario automobile owners are required to have this coverage, the government has significantly reduced the required amount of no-fault benefits required of you in a standard policy, which may mean that you aren’t carrying enough of this coverage to adequately protect your family.

2. Direct compensation for property damage

This mandatory coverage will cover damages to your vehicle and specified property within the vehicle when you’re in an accident with at least one other insured motorist. The accident must not be completely your fault, however.

3. Uninsured automobile coverage

All Ontario drivers must have this coverage in their standard policy. It offers coverage when you’re involved in an accident with an uninsured or unidentified driver and you suffer vehicle damage and/or you or your passengers suffer injury or death.

While it’s not mandatory to have the maximum available coverage of $200,000, it’s highly advisable to best protect yourself and family.

How can Vehicles owners protect themselves beyond the minimum required coverages?

Personalized car insurance can be obtained through relatively inexpensive additions to a standard policy. Even the safest and most accident-free driver places themselves at risk each and every time they put their vehicle into motion.

No one gets into a vehicle expecting to be in an accident, and it’s not just your own driving and insurances to consider since you have no control over how other people drive and the insurances they carry. What you can control is the financial security and well-being of yourself and your passengers by electing automobile insurance coverages bruins the minimum required.

Family Protection Endorsement (FPE)

Many insurers automatically add it to their policies because of its scope and importance of protection. It protects the insured when injury occurs as the result of another negligent underinsured or unidentified driver causing an accident.

A case and point of need for this protection would be if you’re in an accident with an underinsured driver who only has $200,000 in TPL coverage and you suffer $600,000 worth of damages. The other driver’s insurance will only pay the $200,000 regardless of the extent of your damages. If you have a FPE of a million dollars, then your policy will pick up where the other driver’s policy ceased and cover the other $400,000 of damages.

One thing you must remember when it comes to FPE is that the amount of coverage is generally equal to the TPL limit you’ve selected.

How much TPL and FPE is enough?

A $200,000 limit may sound like great protection. If you’ve ever had a severe medical issue, though, then you know better. You likely know that the result can be hundreds of thousands of dollars in medical costs alone.

In accidents, catastrophic and debilitating injuries can easily surpass a mere $200,000 in coverage, and that’s not even considering other damages and death. Remember that you, as the vehicle owner, are personally responsible for any damages beyond the bounds of your insurance. This means that awarded claims against can lead to your assets being ceased, wages garnished, and bankruptcy.

The most common limits in Ontario for TPL and FPE are a million each, and these amounts have a history of meeting the average person’s protection needs. However, due to recent reductions in other benefits, this may not be the case.

The recent reduction in accident benefits is one major reason that you may want to up your TPL and FPE. Both of these are designed to step in when damages and losses exceed the limits of other available insurances, such as accident benefits.

Previously, victims had almost 200,000 in accident benefits to be used and $2 million in catastrophic injury, which left a million of TPL as usually sufficient to cover any additional losses and damages. That was then.

Now that the Ontario government has reduced those benefits to a mere $3,500 (that can be increased to $65,000 in a few cases) and only a million for catastrophic injury, the need for higher TPL and FPE is clear to insurance experts and those that have suffered the financial hardships of experiencing the results of accidents involving underinsured parties.

Insurance experts are now recommending $2 million in TPL. For those with significant assets, an umbrella policy of $5 million under home insurance policies may be a prudent move, too.

Cost is generally the first worry for most people when you tell them they should double their coverage, but the price gap between a million and a two-million-dollar policy is surprisingly slim, especially when you consider you’re getting double the coverage two different ways – TPL and FPE.

Don’t allow a slim budget now to cause you to skip on important insurance coverages that can prevent you from having no budget at all in the future should you get into an accident. The value and worth of this extra coverage far surpasses the small difference in cost.