Car Insurance FAQs
How are auto insurance rates set?
Everybody’s insurance premiums are different and that’s because a combination of factors are often used when determining what insurance rate someone should get. There are many factors that come into play such as geography, traffic congestion, previous claims and the insurance company itself. However, perhaps the most important factors are: where you drive, mileage, driving record, previous claims and the number of drivers in your household who use the vehicle.
Is auto insurance required?
Simple answer, yes. If you hold a driver’s license and drive a car it is mandatory for you to ensure that you have some sort of car insurance. Every driver will have a different premium but it is the job of an organization called Facility Association enabling all licensed drivers who require insurance to obtain it.
What’s the minimum requirement for auto insurance?
It’s important to understand all the relevant minimum requirements for auto insurance, basically insurance is split into mandatory and optional coverage. To legally drive, you must have the have the following in your policy:
Third Party Liability Coverage – By law you must carry a minimum of $200,000 in coverage.
Accident Benefit Coverage – If you become injured in an accident this coverage provides you with benefits regardless of who was at fault.
Direct Compensation – Property Damage (DC-PD) Coverage – This section of your policy provides you with cover to your vehicle if it is damaged or its contents, even if you are not responsible for the accident.
Uninsured Auto Coverage – This effectively covers you and your family if anyone is injured or killed and your vehicle for damages if it occurs at the hands of an uninsured driver.
What kind of auto insurance policies are out there?
As previously mentioned above, there are two main areas of auto insurance policies available which are either mandatory or optional.
Mandatory obligations include third party liability coverage, accident benefit coverage, direct compensation property damage and uninsured driver coverage. Each of these obligations are spoken of more detail above.
Next, that just leaves us with the optional auto insurance policies, these should definitely be considered as they may end up saving you money down the track if you have insufficient coverage. Overall, there are a number of optional extras available to drivers, some of the more popular ones are: collision coverage, comprehensive coverage, third party liability (increase in coverage amount) and transport replacement coverage.
What are the penalties for driving without insurance?
Having already stated that it is the law to have car insurance for all drivers, so naturally if you do not, there will be repercussions. Typically, fines can range anywhere between $5,000 – $50,000, your license suspended or vehicle impounded. Not only is this bad in the short term it also does no favours for you in the long run, if you are convicted you can expect to be labelled, as what the insurance companies like to call, a high risk driver. As a result of this you will no doubt have to pay higher than average insurance rates for the foreseeable future.