Which Insurance is Compulsory?

Signing documents

Insurance protects you against the risk of the unknown and will cover financial loss that one suffers that otherwise could be difficult to afford such as vehicle repairs following a car accident or if a tree in your yard fell and seriously damaged your home.  Having auto insurance is mandatory, however, homeowner insurance is not. Below, we will look at which insurance is compulsory as well as what is recommended to ensure that you have the proper coverage you need.

Auto Insurance

By law, to drive a vehicle in Alberta, drivers must carry the minimum third party liability coverage. Often referred to as PLPD (Personal Liability and Property Damage) coverage. PLPD insurance covers injury caused by motorist to another individual or damage to their property.

These coverage options include:

  • Specified Perils Coverage – Commonly used to protect against fire and theft but can also include damage caused by circumstances such as hail, lightning, and earthquakes. This insurance will cover whatever perils are specifically named in your policy that are not the result of a collision. If damage to your vehicle is caused by a peril that is not included in your policy, you will not be covered.
  • Collision Coverage – This coverage will pay for the cost of repairs to your vehicle in the event that the damage incurred as a result of an accident with another vehicle or object. Collision coverage will also cover repairs or even replacement, regardless of whether or not you were at fault for causing the accident.
  • Comprehensive Insurance – Comprehensive insurance covers damage to your vehicle that is not a result of a collision. It includes a wide range of protection such as damage from weather-related circumstances, fire, theft, and vandalism. Comprehensive insurance provides the greatest degree of protection and coverage in an auto insurance policy.

Home Insurance

While not mandatory, homeowners, condo owners, and even tenants should be protected with a comprehensive insurance policy. In fact, having this coverage is so important that mortgage companies will request proof of insurance before lending funds and many landlords will not rent their properties unless tenants provide proof of insurance.

A comprehensive home insurance policy will cover both the contents and the building for damages caused by insured perils. In a condo or tenant policy, comprehensive insurance would cover the contents only. Additionally, comprehensive homeowners insurance will:

  • Cover your belongings whether they are inside your home, outside in a garage or shed and even if they were to be damaged or stolen while not in your home, such as being stolen from your vehicle.
  • Includes liability coverage in the event that an individual gets hurt while on your property or if you unintentionally damage someone else’s property or accidentally injure someone.
  • Additional Living Expense. This coverage pays for any costs incurred after an insured loss for an alternative accommodation. For example, after a fire in a condo complex, the residents have to move while repairs are being carried out.

In addition to comprehensive homeowners insurance, there are several common endorsements which can be added to provide additional protection. These can include:

  • Sewer Back up
  • Guaranteed Replacement Cost
  • Earthquake
  • Scheduled Personal Articles (high-value jewellery, fur, watches, etc)

Although not all insurance is compulsory, as you can see, having the proper coverage can financially protect you in the event of a disaster and provide peace of mind knowing that your assets are protected.

For a free, no-obligation quote on home or auto insurance, contact one of our knowledgeable insurance specialists today.