Your Top 10 Car Insurance Questions Answered

/ By Cowan Insurance Group

Navigating the details of car insurance can feel overwhelming. To equip Canadians with helpful information, we’ve answered the top ten most commonly asked questions about car insurance. Read on to learn how your car insurance rates are determined, the differences between comprehensive and collision coverage, insurance for car rentals, and more.

“When do car insurance rates go down?”

Car insurance rates are determined by many factors, making it difficult to know for sure when your rates might go down. While in the past, reaching the age of 25 typically caused car insurance rates to go down, this is no longer guaranteed.

Some of the factors that might influence your car insurance rates include:

  • Your accident history
  • Tickets (excluding parking tickets)
  • Moving to a different location, even within the same city
  • A change of vehicle
  • Accumulated years of driving experience or accumulated years with a clean driving record

“Do I need insurance to rent a car, or does my insurance cover rentals?”

Rental coverage is not automatically built into your existing car insurance policy, but it can be added to your policy in the form of a simple, low-cost rider. Before you rent, be sure that your insurance covers the specific car you plan to rent, as some riders only cover vehicles up to a specific value and only up to a certain amount of time.

Alternatively, you can opt to use the rental company’s insurance, which can be added to your rental fee for a specified amount per day of the rental period.

Any time you rent a car, you should make sure that you have insurance coverage. If you drive a rental car without coverage, you will be liable for any damage to the vehicle incurred during the rental period.

“Does the colour of my car affect my insurance rate?”

The colour of your car does not affect your insurance rates. However, details such as the make, model, and year of your vehicle will influence your rates. An expensive sports car that happens to be red may draw higher insurance rates than a sedan, but this is due to the make and model of the car, not the colour.

Get the right car insurance for you.

“Does car insurance affect my credit score?”

As with any bill, paying your car insurance in full and on time can help build credit. Similarly, missing payments can harm your credit score. However, there is nothing specific to insurance payments that enhances your credit score. 

“What information do I need to insure a car?”

To insure a car, you will need to provide your broker with the following information:

  • Your vehicle registration
  • Information on your previous or current insurance coverage
  • The driver’s license(s) of each person that will be driving the car regularly
  • The identity of the vehicle’s registered owner
  • The year, make, model, VIN, and purchase price of your vehicle
  • Information on your driving history, including accidents and any tickets (excluding parking tickets)
  • Information on any modifications or unrepaired damage
  • An estimate of the annual kilometres you will drive in the vehicle
  • The number of kilometres, one-way, between your home and workplace
  • How you’ll be using your vehicle, including any potential business use 

“How do I know what my car insurance covers?”

To determine exactly what your car insurance covers, review your policy declaration documents, which will define the specifics of your coverage.

Various coverage options are available for purchase.  Below are several examples of what car insurance may cover, depending what options you choose.           

  • Damage caused to someone else’s property for which you are legally liable. This may include damage to their car or city owned property such as street signs, light posts, etc.
  • Personal injury to another person for which you are legally liable. This may include injury to passengers in your vehicle at the time of the collision, or injury to drivers and passengers in the other vehicle(s)
  • Damage done to your vehicle where another party is deemed to be at fault, such as bumper damage or scratches and dents
  • Personal injuries you sustain as an occupant in a vehicle or as a pedestrian
  • Coverage is available for rental of a vehicle if your vehicle cannot be driven after a collision, subject to the policy conditions

“What’s the difference between comprehensive and collision insurance?”

If purchased, collision insurance includes coverage for situations when your car is involved in a collision with another object. Depending on the deductible chosen and the claim situation, collision insurance can provide coverage for major repairs to your vehicle damaged in the accident.

Under collision insurance, “objects” include:

  • Another car (including parked cars) or an object that is attached to the car
  • The surface of the ground
  • Any object in or on the ground

Collision insurance would cover damage to your vehicle for which you are at fault or if your car is involved in a hit and run accident. Common loss incurred in a collision could include damage caused by hitting a parked car, pothole damage, and other major car repairs required after a collision. Note: This will be subject to a deductible.

Coverages under comprehensive insurance could include loss or damage caused by incidents such as:

  • Fire
  • Theft or attempted theft
  • Lightning, windstorm, hail, or flooding
  • Falling or flying objects, such as trees
  • Vandalism, such as smashed windows
  • Hitting an animal
  • Windshield damage or replacement

Note: This will be subject to a deductible

Many factors, such as the age of your vehicle, the number of vehicles you own, and how you use your vehicle will influence the kind of coverage you need. 

“How does a car insurance deductible work?”

A car insurance deductible is the amount you pay out of pocket when you make a claim.  For example, if you have a deductible of $1,000 and the repair costs are $3,000,  you will pay $1,000 out of pocket and your insurance company would cover the remainder (or up to the coverage limit, depending on the value of your car).

“Do I have to report a car accident to my insurance company?”

In Ontario, under the terms of your policy, you must report any accident to your insurance carrier or broker if there is any injury or property damage, regardless of who is at fault. Reporting should take place within seven days.

How long an accident stays on your driving record will vary by insurance carrier.

Car accidents can affect your insurance rates, but each case is different.

“When do I need business car insurance?”

If you are using your vehicle as part of your job (aside from driving to and from your workplace), you will require business use coverage on your personal car insurance policy. For example, a real estate agent using their car to show properties would require business use insurance. When you discuss how you’ll be using your vehicle with your broker, be as thorough as possible so that they can help determine whether you need business use coverage.

Other uses of your vehicle may require commercial auto insurance.  Some examples of where you will need commercial car insurance are if you are using your vehicle for:

  • Transporting materials or tools to your place of employment
  • Retail or wholesale delivery (e.g., pizza delivery)
  • Transporting passengers for compensation

If you are unsure whether you need business use or commercial insurance for your car, talk to your broker, who can assess your unique circumstances and help you determine your coverage needs.

Answering your car insurance questions

Our Cowan experts are always available to answer any questions you might have about your car insurance. While exploring the details of your policy may be challenging, our brokers are here to explain your coverage specifics every step of the way.


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