5 car insurance terms to know

Premium

Your premium is the amount you have to pay your insurer to protect your car. It depends on a variety of factors, and you can pay it monthly or annually. It is also liable to change if your situation changes, such as if you add a secondary driver, make a claim, etc. Of course, your premium is important when you’re shopping for insurance, but you also need to think about what coverage you get for it.

Risks/perils

“Risks” or “perils” are what insurers call things that can cause damage. These words are important, especially when you’re talking about comprehensive (all-risks or all-perils) insurance versus coverage for named perils only.

• Comprehensive insurance covers fire, theft, and vandalism, as well as windshield damage. It does not cover wear and tear, such as replacing brake pads.
• Named perils coverage costs less and must name the specific risks it covers, for example theft or fire.

Watch for exclusions

All car insurance policies have exclusions. The most common are personal injuries already covered by law or damage to the vehicle that happened during a type of use not included in the policy.

Deductible

Your deductible is the amount you’re responsible for paying when making a claim. The higher the deductible, the more you save when you buy insurance. It’s something to think about as car insurance rates rise, but it does entail some risk. Is it an amount you could pay if you did have an accident? Will it really be worth filing a claim? Note that you should not have to pay a deductible if your insurer obtains information about the other party in an accident and that person is declared fully responsible for the accident.

Occasional or secondary driver

Do you share a car with your spouse? Do you have a child old enough to drive? If someone else uses your car, it’s worth adding them to your policy as a secondary driver. That way they’ll get the same protection as you. While there is a cost for adding them, it’s much less than insuring them as a primary driver. It also creates a driving record for your teen, which will make it easier for them to get insured when they get their own car—as long as their driving history is good, of course!

If you don’t want to add your spouse or child to your policy, they will be considered an occasional driver, which refers to anyone you might lend your car to from time to time but not regularly. This option does not include a driving record.

Good to know

The definition of a secondary or occasional driver and the impact on the policy varies by insurance company. Make sure you ask. But one thing is sure: the main driver must always be the person who drives the car the most, and a false statement can cost you dearly.

No-fault insurance

No-fault insurance doesn’t determine who is responsible for an accident. In Quebec, no-fault means that anyone injured in an accident on Quebec roads is covered by the public car insurance plan (SAAQ), regardless of who’s at fault. For example, someone will be covered by the public plan even if they were driving under the influence of alcohol or if they didn’t have snow tires on the day after a snowstorm in December.

As for property damage, each driver’s insurance company determines whether or not to cover it.

Always read your insurance contract

We know your insurance contract is long, it’s in fine print, and it’s dry as a bone. But you need to read it. If you have questions about anything, ask your insurance agent or broker, do research online, and compare quotes from at least three companies before you make your decision. Every insurer has different strengths, so the one you used to insure your SUV may not be competitive if you’re switching to a sedan or an electric vehicle. You have to shop around.