Auto insurance is a costly but necessary venture. While the costs of insurance can be high, the potential costs of driving without insurance are not only illegal in Ontario but can be financially catastrophic.

Stockton, CA -- (SBWire) -- 11/20/2014 --The Greeks and Romans introduced a form of health and life insurance around 600 BC, and modern insurance started in earnest in the 1660s after the Great Fire of London. Not long after Lloyd’s of London began to offer policies for shipping interests, and accident insurance was available to rail passengers in England in the 1840s.

The first known auto insurance policy was developed just about the time of the first autos, around the beginning of the 20th century, but it was not until 1925 that the U.S. states of Massachusetts and Connecticut created the first compulsory auto insurance laws — laws that were eventually adopted throughout North America.

For today’s drivers in Ontario, insurance is mandatory, with a minimum of $200,000 in third-party liability coverage, which protects them if someone else is killed or injured, or their property is damaged, by paying for claims resulting in personal lawsuits. Motorists caught driving without this mandatory insurance can face provincial fines of $5,000 to $50,000, along with losing their driver’s licence and vehicle seizure. And insurance providers could deem them a “high-risk” driver, which would only add to their financial woes.

This mandatory insurance for accident benefits coverage provides supplementary medical, rehabilitation, attendant care, caregiver, non-earner, and income-replacement benefits if they are injured in a collision, no matter who is at fault.

But there are still drivers who tempt fate with no coverage.

“It does happen,” said Chris Floyd, president of the Insurance Brokers Association of Ontario, adding that up to 10 per cent of drivers in the province either ignore the mandate or are not aware their insurance term has lapsed.

“It’s not a big problem,” he continued. “It’s certainly not as big a problem as distracted drivers.”

All other insurance coverage in Ontario is optional in most cases. If they lease or finance a vehicle, the lien holder may request comprehensive (fire, theft, vandalism) or collision coverage which pays for damage to their vehicle if they are responsible for the incident. With the high costs of auto repairs today, this extra coverage can be a wise investment.

Other extras include packages which include coverage against specified perils such as fire, riot and earthquake, or coverage if they are transporting their vehicle. Paying for these premiums can be a bewildering experience with so many variables. These variables are regulated by the make and model of vehicle they drive, a clean driving record, their age, the distance travelled with the vehicle, and if the vehicle is used for business or pleasure.

Floyd noted that commuting distance plays a big role in costs, along with where they live. For example, rates are set geographically and by population density, which means they would pay more for the same coverage in Brampton compared to Stratford. In a more populated area, there would be more claims, hence more costs. Their premium may increase significantly if they are charged with a moving violation or collision with their vehicle, and this increase will remain on their insurance file for six years for a collision and three years for a moving violation.

There are three methods of obtaining auto insurance — an insurance broker, an insurance agent or a direct writer. Brokers sell insurance for many companies, an agent works with just one company, and a direct writer sells directly to the vehicle owner. While the third option may offer a better rate, it is best to get someone to provide advice suited to their needs, and in the event of a mishap, help them through the process in the event of a claim.

“A broker will explain coverage and the concept of choice,” said Floyd. “Auto insurance is a complicated product and an independent broker will work as their advocate through this.”

There are discounts available from basic packages. Items such as driving training, using winter tires and seniors’ rates can reduce the premium. Some insurance firms will reduce the total cost of their auto insurance when it is bundled together with another policy such as home insurance.

High-risk drivers who cannot obtain insurance through regular channels can obtain help through the Facility Association (facilityassociation.com), which provides basic coverage.

A relatively new concept to auto insurance in Ontario is telematics, a system that connects a device to a vehicle which monitors the driver. In essence this means the car becomes less of an issue in premium costs, so a good driver of a high-end sports car could pay less in this instance than a risk-prone driver of an economy car. Popular in the U.S. and the U.K., this user-based system is now available with several carriers in Ontario, Floyd noted.

The auto insurance industry is complex and obtaining coverage can be a perplexing and confusing experience. For basic facts and consumer rights there are websites such as the Financial Services Commission of Ontario (fsco.gov.on.ca), which provides regulatory services to protect the public interest and enhance public confidence in the insurance sector, but it would be a wise move to sit with an expert for auto insurance options. They will serve their best interest and provide guidance

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