Owning a car comes with a big responsibility: making sure you understand your car insurance. What does the insurance actually cover in the event of an accident, theft or damage? How do you choose the right coverage for your budget and needs?

Don’t worry – we’re here to explain how car insurance works! We’ll demystify policy jargon and endorsements and give you tips to help make informed decisions. Let’s go!

What is car insurance?

Car insurance is a contract between you and an insurer designed to protect you financially in the event of an accident or damages involving your vehicle. It mainly includes:

Civil Liability: Mandatory in Quebec, this covers bodily injuries and property damages you may cause to others with your car.
Optional Coverages: These cover your own damages (theft, vandalism, collision, glass breakage and so on) based on the options you choose.
Basically, as soon as you start thinking about buying a car, you should think about getting a car insurance quote.

Why is car insurance mandatory?

In Quebec, the law requires all drivers to have car insurance, and for good reason: to protect people on the road. If you are responsible for an accident, your insurance provides coverage for civil liability that can possibly occur from property damages and injuries caused to others.

Without insurance, you cannot legally drive your car, and the consequences can be serious if you are caught without valid coverage. In Quebec, driving without insurance is illegal and leads to severe penalties:

• A fine of up to $2,800 for a first offence.
• Possible suspension of your driver's licence.
• Confiscation or impounding of the vehicle.
• Demerit points added to your driving record (ex. 6 points).
• In the event of an at-fault accident without insurance, you could be held personally financially responsible for all damages caused to others and your own vehicle.

What are the types of car insurance coverage?

Civil Liability (Mandatory)

Civil liability is the minimum legal coverage required for every driver. It covers the financial and legal consequences of damages you cause to third parties (as in, people or property) during an accident. Here are the key elements of civil liability in car insurance:

• Civil liability covers property damage caused to others, and it covers the costs associated with repairing or replacing others' property that you have damaged.
• Civil liability covers medical expenses, loss of income and hospitalization costs that are not covered by the Société d’assurance automobile du Québec (SAAQ) or another public plan, as well as repairs or replacement of damaged property belonging to others.
• In the event of a claim, the insurer looks out for the interests of the insured person and takes up their defence.

Collision or upset risks: These protections cover damage to your car in the event of a collision if you are at fault involving another vehicle. Your insurer will cover the necessary repairs, according to your policy terms. Here are the distinctions:

Collision or upset: This covers direct impacts, including collisions with another vehicle, with the ground, between two vehicles attached to each other, and between a vehicle and a person or animal. The upset (rollover) can be partial or complete, and a deductible applies. This coverage is recommended for new or high-value vehicles.

All perils other than collision or upset: This covers indirect events, such as glass breakage, falling objects or theft. A deductible applies here as well. This protection is useful for all types of vehicles.

Specified perils

This protection offers coverage only for risks specifically listed, and for precise physical and weather-related events. Here are the main risks covered:

• Vehicle theft: Coverage in case of total theft of the vehicle (partial theft, such as tires or accessories, is generally not included).
• Fire: Damage caused by fire or explosion.
• Vandalism: Intentional damage caused by another person (such as broken windows or graffiti).
• Windstorm or hail: Damage resulting from strong wind, hail or falling objects (tree branches, debris and so on.).
• Flood: Damage caused by rising water, heavy rain, or water backup.

In the event of a loss linked to one of these risks, you benefit from the protections provided by your contract: compensation terms, applicable deductibles, reporting deadlines and exclusions.

It’s always a good idea to check your general conditions and optional endorsements (such as replacement vehicle, 24-hour assistance and extended warranty) in order to optimize your coverage and reduce your risk.

All perils

The All perils formula combines Collision or Upset as well as All perils other than collision or upset. It offers complete protection for your car in most possible situations, and it gives you extra peace of mind when you’re on the road. Choose this option if you want maximum protection for your vehicle.

Important car insurance terms to know

Basic coverages

Here are the minimum coverages that form the foundation of your car insurance:

• Civil Liability (Mandatory): Protects you if you are legally responsible for causing injury to another person or damaging their property.
• Property Damage: Covers damage sustained by the insured vehicle and the property belonging to it, including its loss or disappearance.

These coverages are essential and impact the price of your policy. You may also get discounts by choosing your basic coverages wisely!

Deductible

Your deductible represents the amount you must pay before the insurer pays out their portion. How it works is simple: the higher the deductible, the lower your insurance costs. But in the event of a claim, you’ll have higher costs to cover out of pocket. It’s up to you to find the balance between your premium and your potential costs.

Replacement Insurance

This protection compensates for the loss of value of your vehicle in the event of a claim, and it’s particularly useful for owners of new or recent cars. If your car is declared a total loss in its first year, you could replace it with an equivalent model without paying the difference in value.

Replacement Cost (Waiver of Depreciation)

This coverage allows you to get reimbursed for the purchase value of your vehicle rather than its depreciated value in the event of a total loss. Different options exist depending on the age of your vehicle, and the indemnity paid will help you get a new, comparable vehicle without significant financial loss.

Premium

Your insurance premium depends on many factors, such as your vehicle model and how you use it, plus your driving record. To get the best price, get quotes from several insurers, and don’t forget to mention if you have home insurance – you might be able to bundle your home and car insurance to get a discount!

Accidents and Claims

In the event of an accident, contact your insurer as soon as possible to start the claims process. An agent will guide you through the steps. Keep in mind that an accident can have an impact on your future insurance premium. (In Quebec, the SAAQ manages compensation for bodily injuries, while your insurer handles property damage.)

How to choose the right car insurance protection

Assess your actual needs

Here’s a list of things to keep in mind when choosing your car insurance:

• How often you use your vehicle
• Your usual driving environment (city, country, highway)
• Your available budget
• The type of vehicle you have, and its usage
• The value of your vehicle, and its age

Keep this list in mind when you’re deciding on what car insurance you need for your own personal situation.

Consider factors that influence the premium cost

Several elements can cause your car insurance price to vary:

• Your driving record and accident history
• The type and model of your vehicle
• Where you live and where you park
• Your age and driving experience
• The coverage options chosen
• The deductible selected

These factors have a direct impact on the cost of your insurance. Keep in mind that a clean driving record and a licence free of infractions can save you money!

Avoid bad surprises in the event of a claim

To have the right protection in case of damage:

• Read your contract carefully and check the deductible amount to be paid.
• Clearly inform your insurer about how you use your vehicle.
• Confirm what is covered and what isn’t.

These precautions will help you avoid surprises after a loss, because you’ll know exactly what your insurance covers.

Consider additional protections

You can also enhance your coverage with extra options, such as:

• Replacement insurance in case of total loss
• Waiver of depreciation (Replacement cost) for a recent vehicle
• Protection for non-original equipment
• Extended roadside assistance

Plus, in Quebec and across Canada, a lot of insurance providers will offer you discounts if you bundle your car and home insurance together, so make sure you ask!

Get your car insurance with Sonnet!

Looking for simple and fast car insurance? At Sonnet, you can get a quote online, hassle-free. Our digital platform allows you to get coverage tailored to you in just a few clicks, plus we offer competitive prices and flexible options. Get a car insurance quote now!

FAQ: How car insurance works

How does an accident affect your premium?

An accident could cause your car insurance premium to go up. The increase depends on several factors, such as your responsibility in the incident and your driving history. Insurers also consider your vehicle model when calculating the cost of your insurance. (Just a note that safe drivers can save even more money with Sonnet Shift!)

Can you change coverage during the year?

Yes, you have the option to modify your car insurance protection at any time. You can adjust your civil liability and accident benefits according to your needs. To switch from partial to comprehensive protection, simply contact your insurer, who will then guide you through the process.

What documents are needed to buy a policy?

To get car insurance, you’ll need to provide some essential information, specifically regarding your driver’s licence and vehicle ownership (registration). Don't forget that civil liability is mandatory to drive legally! Your insurer will also ask for details about your driving record to assess the risks associated with your profile.

Why consider theft or vandalism coverage?

Protection against theft and vandalism can save you both money and stress. They’re optional coverages, like collision and comprehensive risks, but they complete your basic insurance. They limit your losses in the event of damage to your vehicle, and you could also opt for replacement insurance, which compensates for the depreciation of your car in the event of a total loss.