One of the many decisions to make when buying car insurance is whether to purchase uninsured motorist coverage beyond the minimum amount required. If you’re curious about what uninsured motorist insurance is and how it works, here’s everything you need to know.
What is uninsured motorist protection?
Uninsured motorist protection – also known as uninsured motorist coverage or uninsured automobile coverage – protects you in the event of a crash involving another driver who doesn’t have insurance. Whether the other driver’s insurance lapsed, was cancelled for nonpayment or some other reason, or they just never bought insurance in the first place, this coverage makes sure you won’t be left empty-handed after an incident.
Uninsured motorist coverage also protects you in case the driver of the other vehicle can’t be located, such as in a hit-and-run.
What is covered by uninsured motorist insurance?
Uninsured motorist insurance covers you in three specific situations involving another driver without insurance when they are at fault for the incident:
- You are killed or injured by an uninsured driver or in a hit-and-run
- Your vehicle is damaged by an uninsured motorist
- You are killed or injured by an uninsured driver while you’re not in your car (i.e. walking or riding a bike)
In some places, such as BC, basic uninsured motorist coverage may be expanded to include underinsured drivers. If another driver is insured but doesn’t have enough coverage to pay your claim, your policy will pay the difference up to your limit.
Is uninsured motorist coverage required?
According to the Insurance Bureau of Canada, uninsured automobile coverage is mandatory in the provinces of New Brunswick, Newfoundland & Labrador, Nova Scotia, Ontario, and PEI. If you live elsewhere, you should still double-check with your insurer as it may still be required within the minimum policy.
For instance, in British Columbia, all drivers need to purchase ICBC’s Basic Autoplan for minimum coverage which includes underinsured motorist protection. To claim a repair on your vehicle after a hit and run incident, however, you’ll either need to purchase collision insurance or hit and run coverage on its own.
In Alberta, the Motor Vehicle Accident Claims Program (MVAC) allows injured victims of uninsured drivers or hit and runs to seek compensation of up to $200,000 as a last resort. If you want more coverage on top of this, you can purchase the SEF44 endorsement, also known as Family Protection Coverage – this add-on can be used to claim the financial shortfall from your own auto insurance provider.
Most provinces that require uninsured motorist coverage also allow you to purchase optional additional coverage if you wish. For example, the most basic policy you can get in Ontario automatically includes $200,000 in coverage for uninsured motorists, and you can optionally expand your coverage to $2 million and include underinsured motorists in addition to uninsured motorists.
It’s highly recommended to add or increase this coverage above the minimum requirements as although car insurance is mandated across Canada, not everyone follows the rules – it’s estimated that 2% of vehicles on the road don’t have coverage.
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How much uninsured automobile coverage do I need?
Car accidents can be quite costly. In addition to the expense of repairing or replacing your car, you may need to take time off work, pay for long-term medical attention, and settle lawsuits from others who were involved in the incident.
Ordinarily, these expenses are paid for by the at-fault driver’s insurance company. But if the other driver doesn’t have insurance or can’t be identified, there’s nowhere for that money to come from. For this reason, it’s recommended that you carry at least as much uninsured motorist coverage as you do third-party liability coverage. In most of the country, $1 million is usually sufficient, but in densely populated areas like Southern Ontario, $2 million is now recommended.
It's worth mentioning that basic uninsured motorist insurance usually doesn’t cover underinsured drivers, who have some insurance but not enough to pay your claim. Consider adding an endorsement to your policy that extends insurance to underinsured drivers if it doesn’t come with your default coverage.
You should also consider increasing your coverage for uninsured motorists if you frequently drive in the United States, where minimum insurance requirements are far lower than they are in Canada. For example, BC drivers are required to carry a minimum of $200,000 in third-party liability insurance. But their neighbours to the south in Washington State only need to have $50,000 in coverage for injury and death, and $10,000 in coverage for damage to another person’s property – nowhere near enough to pay the replacement cost of a new car.
How does uninsured motorist coverage affect my insurance rates?
Your basic car insurance policy likely includes some coverage for uninsured motorists, but you can increase your coverage if you so desire. According to MoneySense, uninsured motorist insurance costs between $25-$50 per year on average. Checking my own car insurance policy, I found that Ontario’s standard uninsured automobile coverage costs me $19 per vehicle per year, and additional coverage up to $2 million costs an additional $23.
Your own insurance costs will vary according to where you live, the amount of coverage you purchase, and other variables like your driving experience, claims history, and the type of vehicle you drive.
Does uninsured automobile insurance cover other people who drive my car?
Uninsured motorist insurance only protects you in the event another driver without insurance crashes into you. If another person borrows your car and gets into an accident, your insurance company will treat it the same as if you were the one driving.
To make sure you’ll be covered when others drive your car, make sure everyone with regular access to the vehicle is named on your insurance policy. If you’re concerned about whether your insurance will cover others who may occasionally borrow your car, check with your car insurance company to be sure you have the coverage you need.
The bottom line
Uninsured motorist insurance protects you in the event another driver doesn’t have insurance or flees the scene after a collision. For just a couple dollars a month, you can choose to increase your coverage and extend it to include drivers with inadequate insurance as well. While it’s unlikely you’ll ever be in a serious collision with an uninsured motorist, this affordable coverage is worth the peace of mind.